<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT oF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Firstar Select Funds
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
FIRSTAR SELECT FUNDS
FIRSTAR SELECT REIT-PLUS FUND
October 6, 2000
Dear Shareholder:
The Board of Trustees of Firstar Select Funds (the "Trust") is pleased to
invite you to a special meeting of shareholders of the Firstar Select REIT-
Plus Fund (the "Select REIT Fund") to be held at 11 a.m. (Eastern time) on
November 8, 2000 at the offices of the Trust's special counsel, Drinker Biddle
& Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia, PA 19103
(the "Special Meeting") to act on a proposed reorganization of the Select REIT
Fund into the Firstar REIT Fund, a newly organized portfolio of Firstar Funds,
Inc. ("Firstar Funds"). At the Special Meeting, you will be asked to approve a
proposed Agreement and Plan of Reorganization dated as of August 15, 2000 (the
"Reorganization Agreement") and transactions contemplated by the
Reorganization Agreement pursuant to which the Select REIT Fund would be
reorganized into the Firstar REIT Fund (the "Reorganization"). You also will
be asked to approve an investment advisory agreement between Firstar Funds and
Firstar Investment Research & Management Company, LLC ("FIRMCO").
Firstar Bank, N.A. ("Firstar Bank") serves as investment adviser to the
Select REIT Fund. FIRMCO, an affiliate of Firstar Bank, will serve as
investment adviser to the Firstar REIT Fund. The Reorganization is part of an
overall plan to consolidate the mutual fund investment operations of FIRMCO
and its affiliates. As part of the consolidation plan, in separate
transactions it is proposed that the mutual fund portfolios of Mercantile
Mutual Funds, Inc. and Firstar Stellar Funds, for which FIRMCO also serves as
investment adviser, be reorganized into portfolios of Firstar Funds.
The Board of Trustees of the Trust has unanimously approved the
Reorganization Agreement, which is outlined in detail in the enclosed proxy
materials. The Board of Directors of Firstar Funds has unanimously approved
the Reorganization Agreement and the investment advisory agreement between
Firstar Funds and FIRMCO, which is also described in the enclosed proxy
materials. At the upcoming Special Meeting, you will be asked to approve the
Reorganization Agreement and the investment advisory agreement between Firstar
Funds and FIRMCO on behalf of the Firstar REIT Fund. If shareholder approval
is obtained, the Reorganization will occur on or about November 24, 2000, when
your shares in the Select REIT Fund will be exchanged for shares of equal
value of the Firstar REIT Fund.
THE BOARD OF TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE PROPOSED REORGANIZATION AGREEMENT AND THE PROPOSED INVESTMENT
ADVISORY AGREEMENT BETWEEN FIRSTAR FUNDS AND FIRMCO ON BEHALF OF THE FIRSTAR
REIT FUND.
In considering the Reorganization Agreement, you should note that the
Firstar REIT Fund is a newly organized shell portfolio of Firstar Funds that
has been specifically created for the purpose of the Reorganization. The
Firstar REIT Fund will continue the investment objective and policies of the
Select REIT Fund. The Firstar REIT Fund shares you receive in the
Reorganization will have the same total value as the value of the Select REIT
Fund shares that you held immediately prior to the Reorganization. The
exchange of Select REIT Fund shares for Firstar REIT Fund shares will be tax-
free under federal tax laws, and no front-end or contingent deferred sales
loads will be charged as a result of the exchange.
The formal Notice of Special Meeting, a Proxy Statement and a Proxy Card
are enclosed.
<PAGE>
Whether or not you plan to attend the Special Meeting, you may vote by proxy
in any of the following ways:
1. Internet--Instructions for casting your vote via the Internet can be
found in the enclosed proxy voting materials. The required control number
is printed on your enclosed Proxy Card. If this feature is used, you are
giving authorization for another person to execute your proxy and there is
no need to mail the Proxy Card.
2. Telephone--Instructions for casting your vote via telephone can be
found in the enclosed proxy voting materials. The toll-free 800 number and
required control number are printed on your enclosed Proxy Card. If this
feature is used, you are giving authorization for another person to execute
your proxy and there is no need to mail the Proxy Card.
3. By mail--If you vote by mail, please indicate your voting
instructions on the enclosed Proxy Card, date and sign the Proxy Card, and
return it in the envelope provided, which is addressed for your convenience
and needs no postage if mailed in the United States.
YOUR VOTE IS IMPORTANT TO US. PLEASE REVIEW THE ENCLOSED MATERIALS AND, IF
YOU DO NOT PLAN TO ATTEND THE SPECIAL MEETING, COMPLETE, SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD TODAY. IT IS IMPORTANT THAT YOU RETURN THE PROXY CARD
TO ENSURE YOUR SHARES WILL BE REPRESENTED AT THE SPECIAL MEETING. YOU ALSO MAY
VOTE YOUR PROXY BY A TOLL-FREE PHONE CALL OR BY VOTING ON-LINE, AS INDICATED ON
THE ENCLOSED PROXY CARD.
We look forward to your attendance at the Special Meeting or receiving your
Proxy Card or your on-line or telephone instructions so that your shares may be
voted at the Special Meeting.
Sincerely,
/s/ Timothy L. Ashburn
Timothy L. Ashburn
Chairman of the Board of Trustees
<PAGE>
FIRSTAR SELECT FUNDS
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 8, 2000
October 6, 2000
To the Shareholders of the
Firstar Select REIT-Plus Fund:
A Special Meeting of Shareholders (the "Special Meeting") of the Firstar
Select REIT-Plus Fund (the "Select REIT Fund") will be held on November 8,
2000, at 11:00 a.m. (Eastern time) at the offices of the Select REIT Fund's
special counsel, Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry
Streets, Philadelphia, Pennsylvania 19103, for the purpose of considering and
voting upon:
1. Approval or disapproval of: (a) a proposed Agreement and Plan of
Reorganization dated as of August 15, 2000, by and between Firstar Select
Funds (the "Trust") and Firstar Funds, Inc. ("Firstar Funds"), which
provides for and contemplates (i) the transfer of substantially all of the
assets and liabilities of the Select REIT Fund to the Firstar REIT Fund, a
newly organized portfolio of Firstar Funds, in exchange for Institutional
Shares of the Firstar REIT Fund of equal value, and (ii) the distribution
of the Institutional Shares of the Firstar REIT Fund to shareholders of the
Select REIT Fund; (b) liquidation of the Select REIT Fund; and (c) the
deregistration of the Trust under the Investment Company Act of 1940, as
amended, and the termination of the Trust under state law.
2. The approval or disapproval of an investment advisory agreement
between Firstar Investment Research & Management Company, LLC and Firstar
Funds on behalf of the Firstar REIT Fund.
3. The transaction of such other business as may properly come before
the meeting or any adjournment thereof.
The Proposals stated above are discussed in detail in the attached Proxy
Statement. Shareholders of record as of the close of business on September 11,
2000 are entitled to notice of, and to vote at, the Special Meeting or any
adjournment thereof. YOUR TRUSTEES UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR THE
PROPOSALS.
YOU ARE REQUESTED TO MARK, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE THE PROXY CARD THAT IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF
THE TRUST. YOU ALSO MAY RETURN PROXIES BY (1) TOUCH-TONE TELEPHONE VOTING OR
(2) VOTING ON-LINE. THIS IS IMPORTANT TO ENSURE A QUORUM AT THE SPECIAL
MEETING. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY
SUBMITTING TO THE SECRETARY OF THE TRUST A WRITTEN NOTICE OF REVOCATION OR A
SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN
PERSON.
By Order of the Board of Trustees
/s/ Carol J. Highsmith
Carol J. Highsmith,
Secretary
<PAGE>
FIRSTAR SELECT FUNDS
FIRSTAR SELECT REIT-PLUS FUND
OCTOBER 6, 2000
QUESTIONS & ANSWERS
FOR SHAREHOLDERS OF THE FIRSTAR SELECT REIT-PLUS FUND (THE "FUND"):
The following questions and answers provide an overview of the proposal to
reorganize the Fund into a mutual fund offered by Firstar Funds, Inc.
("Firstar"). We also encourage you to read the full text of the proxy
statement (the "Proxy") that follows.
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Q: WHAT ARE FUND SHAREHOLDERS BEING ASKED TO VOTE UPON?
A: Fund shareholders are being asked to consider and approve a proposal to
reorganize the Fund into the Firstar REIT Fund, a mutual fund offered by
Firstar. In connection with this reorganization, Fund shareholders also are
being asked to approve an investment advisory agreement between Firstar
Investment Research & Management, LLC and Firstar, on behalf of the Firstar
REIT Fund.
Q. WHY HAS THE REORGANIZATION OF THE FUND INTO THE FIRSTAR REIT FUND BEEN
RECOMMENDED?
A: The Board of Trustees of Firstar Select Funds (the "Trust") and the
Board of Directors of Firstar each has determined that the reorganization of
the Fund into the Firstar REIT Fund is in the best interests of the
shareholders of the Fund. Among the benefits for Fund shareholders are: access
to a larger and more diverse group of mutual funds; access to the expanded
equity research capabilities of Firstar Investment Research & Management
Company, LLC; and spreading relatively fixed costs, such as legal fees, over a
larger asset base.
Q: WHAT IS THE ANTICIPATED TIMING OF THE REORGANIZATION?
A: The meeting of shareholders to consider the proposal is scheduled to
occur on November 8, 2000. If all necessary approvals are obtained, the
proposed reorganization will likely take place in mid to late November 2000.
Q: WHO WILL RECEIVE THE PROXY MATERIAL?
A: The Proxy has been mailed to all persons and entities that held shares
of record in the Fund on September 11, 2000. Please note that in some cases
record ownership of and/or voting authority over Fund shares may reside with a
fiduciary or other agent. In these cases, the fiduciary or other agent may
receive the Proxy.
Q: HOW IS THE FUND PROPOSED TO BE REORGANIZED?
A: The proposed agreement and plan of reorganization for the Fund, approved
by the Trust's Board of Trustees, contemplates the reorganization of the Fund
into the Firstar REIT Fund, which has not yet commenced operations. The
Firstar REIT Fund was created to continue the operations of the Fund. The
Firstar REIT Fund has the same objective and investment policies as the Fund.
Q: WHICH CLASS OF SHARES OF THE FIRSTAR REIT FUND WILL I RECEIVE IN THE
REORGANIZATION?
A: All shareholders of the Fund will receive Institutional Shares in the
Firstar REIT Fund. The Fund currently offers two classes of shares to
investors: Class B and Class Y. The Firstar REIT Fund will offer four classes
of shares: Retail A Shares, Retail B Shares, Class Y Shares and Institutional
Shares. These classes of shares represent interests in the same portfolio of
securities owned by the Fund and the Firstar REIT Fund, but have different
expenses and characteristics, such as distribution and shareholder servicing
arrangements, that are intended to meet the needs of different types of
investors. In general, eligibility to purchase a particular class of
<PAGE>
Fund shares or Firstar REIT Fund shares turns on whether the investor is
characterized as an "institutional investor" or a "retail investor."
Q: HOW DO THE EXPENSES OF THE FUND AND FIRSTAR REIT FUND COMPARE?
A: Institutional Shares of the Firstar REIT Fund will have lower expenses
than either Class B or Class Y Shares of the Fund. See "Comparison of the
Select REIT Fund and the Firstar REIT Fund--Expenses" on page 5 of the Proxy
for more detail. In addition, Institutional Shares of the Firstar REIT Fund do
not carry the contingent deferred sales charge applicable to Class B Shares of
the Fund. Institutional Shares of the Firstar REIT Fund are sold without any
front-end sales charge and pay no shareholder servicing fees to brokers or
other financial intermediaries who invest in the Firstar REIT Fund on behalf
of their customers.
Q: WHAT ARE THE COSTS AND FEDERAL TAX IMPLICATIONS TO SHAREHOLDERS IN
CONNECTION WITH THE PROPOSED REORGANIZATION?
A: In general, the costs of the reorganization will not be borne by Fund
shareholders. No sales charge will be imposed on the shares of the Firstar
REIT Fund issued to you in the reorganization, which means that the aggregate
value of the Firstar REIT Fund shares issued to you will be equal to the
aggregate value of the Fund shares that you own immediately prior to the
reorganization. In addition, the exchange of Fund shares for Firstar REIT Fund
shares will be tax-free under federal tax laws. However, the sale of
securities by a Fund, prior to the reorganization, whether in the ordinary
course of business or in anticipation of the reorganization, could increase
the amount of the taxable capital gains distribution made prior to the
reorganization.
2
<PAGE>
FIRSTAR SELECT FUNDS
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of Firstar Select Funds (the "Trust") for use
at a Special Meeting of Shareholders of the Firstar Select REIT-Plus Fund (the
"Select REIT Fund") and any adjournment(s) thereof (the "Special Meeting") to
be held on November 8, 2000 at 11:00 a.m. (Eastern time) at the offices of the
Trust's special counsel, Drinker Biddle & Reath LLP, One Logan Square, 18th
and Cherry Streets, Philadelphia, Pennsylvania 19103. Proxies will be
solicited by mail. Officers and service contractors of the Trust or Firstar
Bank, N.A. ("Firstar Bank"), the Select REIT Fund's investment adviser, may
also solicit proxies, by telephone, facsimile, Internet, telegraph or personal
interview. Any shareholder giving a proxy may revoke it at any time before it
is exercised by submitting to the Trust a written notice of revocation or a
subsequently executed proxy or by attending the Special Meeting and electing
to vote in person. This Proxy Statement and accompanying proxy card will first
be mailed to shareholders on or about October 11, 2000.
Only shareholders of record at the close of business on September 11, 2000
("Record Date") will be entitled to notice of, and to vote at, the Special
Meeting. On the Record Date, the following number of shares were outstanding
and entitled to vote at the Special Meeting: 11,435.299 Class B Shares and
4,075,208.718 Class Y Shares.
Although shares of the Fund have been divided into two classes, the
Proposals to be presented at the Special Meeting will be voted upon by all
shares of the Fund in the aggregate and not on a class by class basis. Each
shareholder of record on the Record Date is entitled to one vote for each full
share held and a proportionate fractional vote for any fractional shares held.
At the Special Meeting, shareholders will be asked to act on the following
Proposals:
(1) (a) Approval of a proposed Agreement and Plan of Reorganization
dated as of August 15, 2000 (the "Reorganization Agreement") by and between
the Trust and Firstar Funds, Inc. ("Firstar Funds"), which provides for and
contemplates (i) the transfer of substantially all of the assets and
liabilities of the Select REIT Fund to the Firstar REIT Fund, a newly
organized portfolio of Firstar Funds, in exchange for Institutional Shares
of the Firstar REIT Fund of equal value, and (ii) the distribution of the
Institutional Shares of the Firstar REIT Fund to shareholders of the Select
REIT Fund; (b) liquidation of the Select REIT Fund; and (c) deregistration
of the Trust under the Investment Company Act of 1940, as amended (the
"1940 Act"), and termination of the Trust under state law; and
(2) Approval of an investment advisory agreement between FIRMCO and
Firstar Funds on behalf of the Firstar REIT Fund (Proposals 1 and 2 are
referred to collectively as the "Reorganization").
The Reorganization Agreement, the form of which is attached as Exhibit A,
provides for the transfer of substantially all of the assets and liabilities
of the Select REIT Fund to the Firstar REIT Fund in exchange for Institutional
Shares of the Firstar REIT Fund of equal value. Each of the Trust and Firstar
Funds is registered as an open-end management investment company (mutual fund)
under the 1940 Act. As a result of the Reorganization, shareholders of the
Select REIT Fund will become shareholders of the Firstar REIT Fund.
Shares of the Select REIT Fund are divided into two classes: Class B Shares
and Class Y Shares. Shares of the Firstar REIT Fund will be divided into four
Classes: Retail A Shares, Retail B Shares, Class Y Shares and Institutional
Shares. As with the Select REIT Fund, the various classes of Firstar REIT Fund
shares will all represent interests in the same portfolio of securities owned
by the Firstar REIT Fund, but will have different characteristics (such as
fees and shareholder servicing arrangements) that are intended to meet the
needs of
<PAGE>
different types of investors. As part of the Reorganization, holders of Class
B Shares and Class Y Shares of the Select REIT Fund will receive Institutional
Shares of the Firstar REIT Fund.
If the Reorganization is approved and the transactions contemplated by the
Reorganization Agreement are consummated, the Trust will transfer
substantially all of its assets and liabilities, deregister as a registered
investment company, and terminate under Ohio law.
As part of the Reorganization, Firstar Funds and FIRMCO will enter into a
new investment advisory agreement with respect to the Select REIT Fund. A copy
of the Investment Advisory Agreement is attached as Exhibit B. Generally, as
will be discussed in more detail below, the new investment advisory agreement
will be substantially similar in all material respects to the investment
advisory agreement for the Select REIT Fund.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS.
PROPOSAL 1: APPROVAL OF THE REORGANIZATION AGREEMENT
Reasons for the Reorganization. Firstar Bank serves as investment adviser
to the Select REIT Fund. FIRMCO, an affiliate of Firstar Bank, will serve as
investment adviser to the Firstar REIT Fund. The Reorganization is part of an
overall plan to consolidate the mutual fund investment operations of FIRMCO
and its affiliates. As part of the consolidation plan, in separate
transactions it is proposed that the mutual fund portfolios of Mercantile
Mutual Funds, Inc. and Firstar Stellar Funds, for which FIRMCO also serves as
investment adviser, be reorganized into portfolios of Firstar Funds.
The trustees have unanimously approved, subject to shareholder approval, a
proposal for the Select REIT Fund to effectuate the transactions set forth in
the Reorganization Agreement. If the Reorganization and other consolidation
transactions are approved, Firstar Funds will consist of 36 mutual fund
portfolios. The trustees of the Trust believe that the Reorganization has the
potential to benefit shareholders by decreasing expenses because of the
economies of scale that may be realized by the larger Firstar Funds
organization. The Reorganization will allow services to be provided to the
Firstar REIT Fund under the single corporate umbrella of Firstar Funds, which
may result in operational efficiencies and cost savings. The Reorganization
will eliminate the need to maintain separate registrations for two different
business entities and will allow relatively fixed costs, such as legal fees,
to be spread across a larger asset base. In addition, the Reorganization will
give shareholders access to the broader array of mutual funds offered by
Firstar Funds.
Description of the Reorganization Agreement. The Reorganization Agreement
provides that substantially all of the assets and liabilities of the Select
REIT Fund will be transferred to, and acquired by, the Firstar REIT Fund in
exchange for full and fractional Institutional Shares issued by the Firstar
REIT Fund. Institutional Shares issued by the Firstar REIT Fund will have the
same aggregate dollar value as the aggregate dollar value of the Class B and
Class Y shares of the Select REIT Fund immediately prior to the effective time
of the Reorganization. Immediately after the effective time of the
Reorganization, the Select REIT Fund will distribute to shareholders of the
Firstar REIT Fund the Institutional Shares received by the Select REIT Fund in
the Reorganization in liquidation of the Select REIT Fund. Each shareholder of
record of the Select REIT Fund at the effective time of the Reorganization
will receive shares of the Firstar REIT Fund with the same aggregate dollar
value of the shares such shareholder held in the Select REIT Fund prior to the
effective time of the Reorganization. Shareholders owning Class B Shares and
Class Y Shares of the Select REIT Fund will receive Institutional Shares of
the Firstar REIT Fund. Each Select REIT Fund shareholder of record at the
effective time of the Reorganization will receive any unpaid dividends or
distributions declared before the effective time of the Reorganization.
Firstar Funds will establish an account for each former shareholder of the
Select REIT Fund that will reflect the number and class of Firstar REIT Fund
shares distributed to that shareholder. The Firstar REIT Fund shares issued in
the Reorganization will be in uncertificated form.
2
<PAGE>
Please note that a vote for or against the Reorganization Agreement
includes a vote for or against the reorganization of the Select REIT Fund into
the Firstar REIT Fund. If the Reorganization Agreement is approved and the
transactions contemplated thereby are consummated, the Select REIT Fund will
transfer substantially all of its assets and liabilities as of the effective
time of the Reorganization, all outstanding shares of the Select REIT Fund
will be redeemed and cancelled in exchange for Institutional shares of the
Firstar REIT Fund, and the Trust will wind up its affairs and apply to be
deregistered as an investment company under the 1940 Act and thereafter
terminated under Ohio law.
The Reorganization is subject to a number of conditions, including: (i)
approval by the Select REIT Fund shareholders of the Reorganization Agreement
and the related matters described in the proxy; (ii) approval of the new
investment advisory agreement between FIRMCO and the Firstar REIT Fund; (iii)
the receipt of certain legal opinions described in the Reorganization
Agreement (which include an opinion of Firstar Funds' counsel addressed to the
Trust indicating that the Firstar REIT Fund shares issued in the
Reorganization will be validly issued, fully paid and non-assessable and an
opinion with respect to certain tax matters); (iv) the receipt of certain
certificates from the parties concerning the accuracy of the representations
and warranties in the Reorganization Agreement; (v) the receipt of any
necessary exemptive relief or no-action assurances requested from the SEC or
its staff with respect to Section 17(a) of the 1940 Act; and (vi) the parties'
performance in all material respects of their respective covenants and
undertakings as described in the Reorganization Agreement. The Trust has
applied for exemptive relief with respect to Section 17(a) of the 1940 Act and
expects that the SEC will issue an order granting such relief prior to the
Reorganization.
The Reorganization Agreement provides that FIRMCO has agreed to pay all
expenses, including any proxy solicitation costs, associated with the
Reorganization, or cause one of its affiliates to do so. The Reorganization
Agreement also provides, among other things, that the Reorganization Agreement
may be terminated at any time upon the mutual consent of both the Trust and
Firstar Funds, or by either the Trust or Firstar Funds, under certain
conditions, and that the officers of the Trust and Firstar Funds may amend the
Reorganization Agreement as authorized by their respective Boards of Trustees
or Directors.
Evaluation by the Board of Trustees of the Trust. The Trust's Board met on
June 13, 2000, to consider the Reorganization proposal offered by management
of FIRMCO. In preparation for the meeting, each of the trustees of the Trust
was provided with detailed information about the Reorganization and FIRMCO.
These materials summarized the principal terms and conditions of the
Reorganization, including the intention that the Reorganization be completed
on a tax-free basis for the Select REIT Fund and its shareholders. In
addition, the trustees received comparative information about the Select REIT
Fund and the Firstar REIT Fund, including information concerning, but not
limited to, the following matters: (i) the investment objective and policies
of the Firstar REIT Fund; (ii) advisory, distribution and other servicing
arrangements of the Firstar REIT Fund; and (iii) fund expenses, which are
expected to be lower after the Reorganization than the expenses of each class
of shares of the Select REIT Fund. The Trust's Board was also provided with
information about FIRMCO, including information regarding those individuals
with responsibility for managing the Firstar REIT Fund.
The Trust's Board unanimously approved the Reorganization Agreement on
August 15, 2000.
During its deliberations, the Trust's Board (with the advice and assistance
of counsel) reviewed, among other things: (i) the potential effect of the
Reorganization on the shareholders of the Select REIT Fund; (ii) the
capabilities, practices and resources of FIRMCO and the Firstar REIT Fund's
other service providers; (iii) the investment advisory and other fees that
will be paid by the Firstar REIT Fund, and the projected expense ratios of the
Firstar REIT Fund as compared with those of the Select REIT Fund and an
industry peer group; (iv) the investment objective, policies and limitations
of the Firstar REIT Fund; (v) the shareholder services offered by Firstar
Funds; (vi) the terms and conditions of the Reorganization Agreement; (vii)
the anticipated tax consequences of the Reorganization for the Select REIT
Fund and its shareholders; (viii) the number of investment options that would
be available to shareholders after the Reorganization; and (ix) the fact that
the person responsible for managing the Select REIT Fund's investment
portfolio is expected to manage the Firstar REIT Fund's investment portfolio
after the Reorganization. The Trust's Board also considered FIRMCO's belief
that the Reorganization would facilitate consolidation of managerial resources
of FIRMCO and its affiliates and
3
<PAGE>
generally enhance operational efficiencies and focus with respect to the
mutual funds advised by FIRMCO and its affiliates.
After consideration of the foregoing and other factors, the trustees of the
Trust unanimously determined that the Reorganization is in the best interests
of shareholders of the Select REIT Fund, and that the interests of the
existing shareholders of the Select REIT Fund will not be diluted as a result
of the Reorganization.
Capitalization. The following table sets forth, as of April 30, 2000 (the
end of Firstar Funds' semi-annual period): (1) the capitalization of each
class of shares of the Select REIT Fund; (2) the capitalization of the Firstar
REIT Fund prior to the Reorganization; and (3) the pro forma capitalization of
the Firstar REIT Fund as adjusted to give effect to the Reorganization.
<TABLE>
<CAPTION>
NET ASSET VALUE
TOTAL NET ASSETS SHARES OUTSTANDING PER SHARE
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Select REIT Fund........ $95,391 11,513.428 $8.29
(Class B Shares) (Class B Shares) (Class B Shares)
$31,998,416 3,874,447.367 $8.26
(Class Y Shares) (Class Y Shares) (Class Y Shares)
Firstar REIT Fund*...... $-- -- $--
(Institutional Shares) (Institutional Shares) (Institutional Shares)
Firstar REIT Fund (pro $32,093,807 3,885,995.914 $8.26
forma combined fund)... (Institutional Shares) (Institutional Shares) (Institutional Shares)
</TABLE>
--------
* Institutional Shares of the Firstar REIT Fund have not been offered to
investors as of the date of this proxy statement.
Federal Income Tax Considerations. The Select REIT Fund and the Firstar
REIT Fund each intends to qualify as of the effective time of the
Reorganization as a "regulated investment company" under the Internal Revenue
Code of 1986, as amended (the "Code"). Accordingly, the Select REIT Fund has
been, and the Firstar REIT Fund expects to be, relieved of federal income tax
liability.
Consummation of the Reorganization is subject to the condition that the
Trust and Firstar Funds receive an opinion from Drinker Biddle & Reath LLP,
counsel to Firstar Funds, substantially to the effect that, for federal income
tax purposes: (i) the transfer of substantially all of the assets and
liabilities of the Select REIT Fund to the Firstar REIT Fund in exchange for
shares issued by the Firstar REIT Fund, and the distribution of those Firstar
REIT Fund shares to shareholders of the Select REIT Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, and the
Select REIT Fund and the Firstar REIT Fund will each be a "party to a
reorganization" within the meaning of Section 368(b) of the Code in respect of
the Reorganization; (ii) no gain or loss will be recognized by the Select REIT
Fund upon the transfer of its assets and liabilities to the Firstar REIT Fund
solely in exchange for shares of the Firstar REIT Fund; (iii) no gain or loss
will be recognized by the Firstar REIT Fund upon the receipt of the assets and
assumption of liabilities of the Select REIT Fund solely in exchange for
Firstar REIT Fund shares; (iv) the basis of the Select REIT Fund's assets
received by the Firstar REIT Fund pursuant to the Reorganization will be the
same as the basis of those assets in the hands of the Select REIT Fund
immediately prior to the Reorganization; (v) the holding period of the Select
REIT Fund's assets in the hands of the Firstar REIT Fund will include the
period for which such assets have been held by the Select REIT Fund; (vi) no
gain or loss will be recognized by the Select REIT Fund on the distribution to
its shareholders of shares of the Firstar REIT Fund; (vii) no gain or loss
will be recognized by the shareholders of the Select REIT Fund upon their
receipt of the Firstar REIT Fund shares in exchange for such shareholders'
shares of the Select REIT Fund; (viii) the basis of the Firstar REIT Fund
shares received by the shareholders of the Select REIT Fund will be the same
as the basis of the Select REIT Fund shares surrendered by such shareholders
pursuant to the Reorganization; (ix) the holding period for the Firstar REIT
Fund shares received by each Select REIT Fund shareholder will include the
period during which such shareholder held the Select REIT Fund shares
surrendered in exchange therefor, provided that such Select REIT Fund shares
are held
4
<PAGE>
as a capital asset in the hands of such Select REIT Fund shareholder on the
date of the exchange; and (x) the Firstar REIT Fund will succeed to and take
into account the tax attributes of the Select REIT Fund as of the effective
time of the Reorganization, as described in Section 381(c) of the Code,
subject to conditions and limitations specified in the Code. Shareholders of
the Select REIT Fund should note, however, that the sale of securities by the
Select REIT Fund prior to the effective time of the Reorganization, whether in
the ordinary course of business or in anticipation of the closing of the
Reorganization, could increase the amount of the taxable capital gains
distribution made prior to the Reorganization.
The Trust and Firstar Funds have not sought, and will not seek, a private
ruling from the Internal Revenue Service ("IRS") with respect to the federal
income tax consequences of the Reorganization. The opinion of Drinker Biddle &
Reath LLP with respect to the federal income tax consequences of the
Reorganization is not binding on the IRS and does not preclude the IRS from
adopting a contrary position. Shareholders should consult their own advisers
concerning the potential tax consequences of the Reorganization to them,
including any applicable foreign, state or local income tax consequences.
COMPARISON OF THE SELECT REIT FUND AND THE FIRSTAR REIT FUND
Investment Objectives and Policies. The Firstar REIT Fund is a newly
organized shell portfolio of Firstar Funds that has been specifically created
for the purpose of the Reorganization. Following the Reorganization, the
Firstar REIT Fund will carry on the business of the Select REIT Fund. The
Firstar REIT Fund will have the same investment objective, policies and
limitations as the Select REIT Fund.
Expenses. It is projected that the total operating expense ratio for
Institutional Shares of the Firstar REIT Fund, after fee waivers, will be
lower than the total operating expense ratios for both Class B Shares and
Class Y Shares of the Select REIT Fund. Detailed pro forma expense information
is presented in the table below.
<TABLE>
<CAPTION>
SELECT REIT
FUND FIRSTAR REIT
------------------ FUND
CLASS B CLASS Y INSTITUTIONAL
SHARES SHARES SHARES
------- ------- -------------
<S> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM
YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering
price)................................... None None None
Maximum Deferred Sales Charge (Load) (as a
percentage of offering price)............ 5.00%(1) None None
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends..................... None None None
Redemption Fee............................ None None None(2)
Exchange Fee.............................. None None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES
DEDUCTED FROM FUND ASSETS)
Management Fees........................... 0.75% 0.75% 0.75%(3)
Distribution and Service (12b-1) Fees..... None(4) None(4) None
Other Expenses............................ 20.80%(5) 0.86%(5) 0.78%(6)
Total Annual Fund Operating Expenses...... 21.55% 1.61% 1.53%
Expense Reimbursement..................... 19.95%(7) N/A 0.20%(3)
Net Fund Operating Expenses............... 1.60% 1.61% 1.33%
</TABLE>
--------
(1) The contingent deferred sales charge is 5.00% in the first year, declining
to 1.00% in the fifth year and 0.00% thereafter.
(2) A fee of $15.00 is charged for each non-systematic withdrawal from a
retirement account for which Firstar Bank is custodian.
(3) FIRMCO has contractually agreed that for the period from the effective
time of the Reorganization through October 31, 2001 a portion of its
management fee will not be imposed on the Firstar REIT Fund. As a result
of the fee waiver, management fees will be 0.55% of the Firstar REIT
Fund's average daily net assets.
5
<PAGE>
(4) The Trust has adopted a Distribution (12b-1 Plan) which permits the Select
REIT Fund to pay up to 0.25% of average net assets as a distribution fee
to the Select REIT Fund's distributor. The Select REIT Fund's expenses
have not been affected by the 12b-1 Plan because the Select REIT Fund does
not intend to activate the Plan through July 31, 2001.
(5) "Other Expenses" includes (1) administration fees, transfer agency fees
and all other ordinary operating expenses of the Select REIT Fund not
listed above, plus (2) an annual shareholder servicing fee of 0.25% of
average daily net assets. For the foreseeable future, the Select REIT Fund
plans to limit the shareholder servicing fee to an annual rate of 0.10% of
average daily net assets.
(6) Other Expenses for the Firstar REIT Fund are based on estimated amounts.
(7) Firstar Bank has agreed contractually to maintain the Select REIT Fund's
Class B expenses until July 31, 2001 at the lesser of: a) 1.60%, or b) the
ratio of operating expenses to average net assets for the Select REIT
Fund's Class Y shares, for the same period. There is no contractual
agreement to reimburse Class Y expenses.
Example*
You would pay the following expenses on a $10,000 investment assuming
(1) 5% gross annual return, and (2) the Funds' operating expenses remain
the same as those shown in the above table.
<TABLE>
<CAPTION>
SELECT REIT FIRSTAR REIT
FUND FUND
-------------- -------------
CLASS
CLASS B Y INSTITUTIONAL
SHARES SHARES SHARES
------- ------ -------------
<S> <C> <C> <C>
1 year........................................ $ 668 $ 169 $ 135
3 years....................................... $ 4,420 $ 550 $ 421
5 years....................................... $ 7,123 $ 995 $ 729
10 years...................................... $10,981 $2,440 $1,601
</TABLE>
If you did not redeem your Select REIT Fund's Class B shares, you would
pay the following expenses:
<TABLE>
<S> <C>
1 year............................................................. $ 168
3 years............................................................ $ 4,248
5 years............................................................ $ 7,094
10 years........................................................... $10,981
</TABLE>
--------
* These examples should not be considered a representation of future
expenses which may be more or less than those shown. The assumed 5%
annual return is hypothetical and should not be considered a
representation of past or future annual return. Actual return may be
greater or less than the assumed amount. These examples assume that
all dividends and other distributions are reinvested.
Investment Advisers. Firstar Bank, 425 Walnut Street, Cincinnati, Ohio
45202, serves as investment adviser to the Select REIT Fund. Firstar Bank was
solely owned by StarBanc Corporation until November 20, 1998 when StarBanc
Corporation merged with Firstar Corporation. The new entity retained the
"Firstar" name and Firstar Corporation is now the parent company of both
Firstar Bank and FIRMCO. Firstar Bank was known as Star Bank, N.A. prior to
the merger. As of June 30, 2000 Firstar Bank had $41 billion in assets under
management. As part of its regular banking operations, Firstar Bank may make
loans to public companies. As a result, it may be possible for the Select REIT
Fund and the Firstar REIT Fund to hold or acquire securities of companies that
are also lending clients of Firstar Bank. The lending relationship will not be
a factor in the selection of securities.
FIRMCO, a Wisconsin limited liability company and subsidiary of Firstar
Corporation, a bank holding company, will serve as investment adviser to the
Firstar REIT Fund. FIRMCO, with principal offices at Firstar Center, 777 East
Wisconsin Avenue, 8th Floor, Milwaukee, Wisconsin 53202, has provided
investment advisory services since 1986. As of June 30, 2000, FIRMCO had $33
billion in assets under management. Firstar Corporation has agreed to permit
Firstar Funds to use the name "Firstar Funds" and expansions thereof on a
6
<PAGE>
non-exclusive and royalty-free basis in connection with mutual fund management
and distribution services within the United States, its territories and
possessions. This agreement may be terminated by Firstar Corporation under
specified circumstances, including if no affiliate of Firstar Corporation is
serving as investment adviser for any portfolio offered by Firstar Funds.
Administrative and Fund Accounting Services. Unified Fund Services, Inc.
("UFS"), 431 North Pennsylvania Street, Indianapolis, Indiana 46204, serves as
administrator to the Trust. In its capacity as administrator, UFS provides the
Trust with certain monthly reports, recordkeeping and other management-related
services. UFS also provides fund accounting and dividend disbursement services
to the Trust, including maintaining the Trust's accounts, books and records
and calculating daily net asset value of the Select REIT Fund's shares. For
these administrative and fund accounting services, UFS receives a fee equal to
an annual rate of 0.18% of the Select REIT Fund's average daily net assets.
Firstar Mutual Fund Services, LLC ("FMFS"), with principal offices at 615
East Michigan Street, Milwaukee, Wisconsin 53202, will serve as administrator
to the Firstar REIT Fund and will perform substantially the same services as
the adminstrator to the Select REIT Fund. FMFS serves as administrator
pursuant to an existing administration agreement between Firstar Funds and
FMFS with respect to all portfolios of Firstar Funds. As administrator, FMFS
will: (1) provide general fund management services; (2) monitor compliance
with (a) various federal and state laws and regulations, (b) registration and
reporting requirements, and (c) tax rules; (3) prepare financial reports; and
(4) handle tax reporting. For its services as administrator, FMFS will be
entitled to a fee equal to an annual rate of 0.125% of the first $2 billion of
the average aggregate daily net assets of Firstar Funds, plus 0.10% of the
average aggregate daily net assets of Firstar Funds in excess of $2 billion.
FMFS also will provide fund accounting services to the Firstar REIT Fund,
including maintaining the Firstar REIT Fund's financial accounts and records
in compliance with the 1940 Act and providing other accounting services. For
its accounting services, FMFS will be entitled to receive fees at an annual
rate, based on average daily net assets of the Firstar REIT Fund, equal to
$45,000 for the first $100 million, plus 0.01875% of the next $200 million,
plus 0.01125% of the excess over $300 million.
Other Service Providers. The Trust and Firstar have different service
providers. Upon completion of the Reorganization, Firstar will continue to
engage its existing service providers. In all cases, the types of services
provided to the Select REIT Fund and the Firstar REIT Fund under these service
agreements are substantially similar.
<TABLE>
<CAPTION>
SELECT REIT FUND FIRSTAR REIT FUND
-------------------------------- ---------------------------------
<S> <C> <C>
Distributor............. Unified Management Corporation Quasar Distributors LLC
431 North Pennsylvania Street 615 East Michigan Street
Indianapolis, IN 46204 Milwaukee, WI 53202
Transfer Agent.......... Unified Fund Services, Inc. Firstar Mutual Fund Services, LLC
Custodian............... Firstar Bank Firstar Bank
Independent
Accountants............ McCurdy & Associates CPA's, Inc. PricewaterhouseCoopers LLP
</TABLE>
Sales Loads and Distribution Arrangements. Class B Shares of the Select
REIT Fund are offered at net asset value without the imposition of a front-end
sales load at the time of purchase. However, there is a maximum 5% contingent
deferred sales charge assessed on Class B Shares that are redeemed within one
year of purchase, declining to 1% in the fifth year and eliminated thereafter.
Class Y Shares of the Select REIT Fund are, and Institutional Shares of the
Firstar REIT Fund will be, offered at net asset value with no front-end sales
load or contingent deferred sales charge.
The Trust's Board has adopted a distribution plan pursuant to Rule 12b-1
under the 1940 Act which permits each of the Class B Shares and Class Y Shares
of the Select REIT Fund to pay a distribution fee of up to 0.25% of the
average daily net assets of such class to the Select REIT Fund's distributor.
The Trust's Board has never activated payments under the distribution plan.
The Board of Directors of Firstar Funds ("Firstar's Board") does not intend to
adopt a distribution plan with respect to Institutional Shares of the Firstar
REIT Fund.
7
<PAGE>
The Firstar REIT Fund will also offer three additional classes of shares
with different sales charges and distribution arrangements.
Shareholder Servicing Arrangements. The Trust's Board also has adopted a
shareholder servicing plan which permits each of the Class B Shares and Class
Y Shares of the Select REIT Fund to pay a shareholder servicing fee of up to
0.25% of the average daily net assets of such class to servicing
organizations. The Trust's Board has limited payments under the shareholder
servicing plan to 0.10% of average daily net assets. Firstar's Board does not
intend to adopt a shareholder servicing plan with respect to Institutional
Shares of the Firstar REIT Fund.
Shareholder Transactions and Policies. The Select REIT Fund and Firstar
REIT Funds offer generally similar shareholder transactions and policies. The
following charts compare the purchase, redemption and exchange policies of the
Select REIT Fund and Firstar REIT Fund.
PURCHASE POLICIES
<TABLE>
<CAPTION>
SELECT REIT FUND: FIRSTAR REIT FUND:
CLASS B OR Y SHARES INSTITUTIONAL SHARES
------------------------------------ ------------------------
<S> <C> <C>
Minimum Initial
Investment............. . $1000 for individuals. None.
. $500 for Education IRA Customers.
. $25 for Firstar Bank Connections
Group Banking customers and
Firstar Bank employees and members
of their immediate family,
participants in the Firstar Bank
Student Finance 101 Program who
establish a systematic investment
program and persons contributing
to SIMPLE IRAs.
. $1000 for trust or institutional
customers of Firstar Bank ($1,000
may be determined by combining the
amount in all mutual fund accounts
you maintain with Firstar Bank)
Minimum Subsequent
Investments............ None. None.
Purchase Methods........ By telephone (Firstar Bank customers Purchases are effected
only); by mail; by federal funds pursuant to a customer's
wire; through an automatic account at Firstar Bank,
investment plan; or through N.A. Trust Department or
shareholder service organizations. at another chosen
institution or broker-
dealer pursuant to
procedures established
in connection with the
requirements of the
account.
</TABLE>
8
<PAGE>
REDEMPTION PROCEDURES
<TABLE>
<CAPTION>
SELECT REIT FUND: FIRSTAR REIT FUND:
CLASS B OR Y SHARES INSTITUTIONAL SHARES
------------------- ------------------------------------
<S> <C> <C>
Through a broker-dealer, other
financial organization, or
shareholder organization...... Yes Yes
By mail; telephone; or wire.... Yes Follow established procedures
of customer's financial institution.
By Internet.................... No Follow established procedures
of customer's financial institution.
By systematic withdrawal plan.. Yes No
</TABLE>
Both the Select REIT Fund and the Firstar REIT Fund may redeem Class B and
Class Y Shares and Institutional Shares, as applicable, if the balance in a
shareholder's account falls below $1,000 as a result of selling or exchanging
shares. In such event, the Trust or Firstar Funds will provide shareholders
with 30 or 60 days' written notice, respectively, of such fact and an
opportunity to raise the account balance prior to any redemption.
SHARE EXCHANGES
<TABLE>
<CAPTION>
SELECT REIT FUND: FIRSTAR REIT FUND:
CLASS B OR Y SHARES INSTITUTIONAL SHARES
------------------- ------------------------------------
<S> <C> <C>
Through a broker-dealer, other
financial organization, or
shareholder organization..... No Yes
By mail; by telephone......... No Follow established procedures
of customer's financial institution.
Minimum....................... N/A $1,000
</TABLE>
More Information about Exchanging Shares. The Select REIT Fund has no
exchange privilege. Without a sales charge, Institutional Shares of the
Firstar REIT Fund may be exchanged for Institutional Shares of any money
market fund or non-money market fund offered by Firstar Funds.
PRICING OF SHARES FOR EACH OF THE SELECT REIT FUND AND FIRSTAR REIT FUND
For processing purchase and redemption orders, the net asset values ("NAV")
per share of the Select REIT Fund and the Firstar REIT Fund are calculated
each business day at 4:00 p.m. (Eastern time). An investor's order for the
purchase of shares is priced at the next NAV calculated after the order is
received. An investor's order for redemption of shares is priced at the next
NAV calculated after the shares are properly tendered for redemption.
DIVIDENDS
Dividends for the Select REIT Fund are declared and paid quarterly while
dividends for the Firstar REIT Fund are declared and paid annually.
Comparison of Business Structures. The Trust was organized as an Ohio
Business Trust on February 28, 1997. It is subject to its Agreement and
Declaration of Trust and By-Laws. Firstar Funds was organized as a Wisconsin
corporation on February 15, 1988 and is subject to the provisions of its
Articles of Incorporation and By-Laws. The Trust's Agreement and Declaration
of Trust authorizes the Board of Trustees to divide the beneficial interest in
the Trust into an unlimited number of shares (with no par value) in one or
more series of shares, and to issue each such series in one or more classes.
Firstar Funds' Articles of Incorporation authorize the Board of Directors to
issue full fractional shares of capital stock ($0.0001 par value per share)
and to classify and reclassify any particular class of shares into one or more
additional series of shares.
9
<PAGE>
Although the rights of a shareholder of a Wisconsin corporation vary in
certain respects from the rights of an interestholder of an Ohio business
trust, the attributes of a share of common stock of Firstar Funds are
substantially similar to those of a share of beneficial interest of the Trust.
Each share of the Trust and Firstar Funds represents an equal proportionate
interest in the related investment portfolio with other shares of the same
class (if applicable) and is entitled to dividends and distributions on the
assets belonging to such investment portfolio as are declared in the
discretion of the Board of Trustees of the Trust or the Board of Directors of
Firstar Funds, as the case may be. Shares of both the Trust and Firstar Funds
are entitled to one vote for each full share held and fractional votes for
fractional shares held.
In accordance with the Trust's Agreement and Declaration of Trust, each
series will vote as a separate series except as to: (a) any matter with
respect to which a vote of all series voting as a single series is required by
the 1940 Act or rules and regulations promulgated thereunder, or would be
required under the Ohio General Corporation Law if the Trust were an Ohio
corporation; and (b) any matter which the Trustees have determined affects
only the interests of one or more series or classes, in which case only the
holders of shares of the one or more affected series or classes will be
entitled to vote.
In accordance with the Firstar Funds' Articles of Incorporation, shares of
all classes are voted in the aggregate and not by class except: (a) as
otherwise required by applicable law or permitted by the Board of Directors,
or (b) when the matter affects only the interests of the shareholders of one
or more particular classes (in which case only shareholders of the affected
class or classes are entitled to vote). Each share of a series of a class
shall vote together in the aggregate with all other shares of the same class
and not by series on all matters submitted to a vote of the shareholders of
that class, except that: (a) on any matter that pertains to agreements or
expenses and liabilities and is submitted to a vote of shareholders, only the
particular series specified therein shall be entitled to vote, except that:
(i) if the matter affects shares other than such series, those shares will
also be entitled to vote, and will be voted in the aggregate together with
other affected shares and not by individual series except where otherwise
required by law or permitted by the Board of Directors; and (ii) if the matter
does not affect the particular series of shares specified therein, that series
shall not be entitled to vote (except where required by law or permitted by
the Board of Directors); and (b) on any matter that pertains to agreements or
expenses and liabilities and is submitted to a vote of shareholders, the
particular series of shares specified therein shall not be entitled to vote,
except where otherwise required by law or permitted by the Board of Directors,
and except that if the matter affects such series, that series shall be
entitled to vote, and in such case shall be voted in the aggregate together
with all other shares voting on the matter and not by individual series except
where otherwise required by law or permitted by the Board of Directors.
PROPOSAL 2: APPROVAL OF INVESTMENT ADVISORY AGREEMENT
Firstar Bank serves as investment adviser to the Select REIT Fund pursuant
to a management agreement between Star Bank, N.A. (predecessor to Firstar
Bank) and the Select REIT Fund dated as of May 28, 1997 (the "Current
Agreement"). The Current Agreement was approved by the sole initial
shareholder of the Select REIT Fund on May 22, 1997. Firstar Funds and FIRMCO
will enter into an investment advisory agreement with respect to the Firstar
REIT Fund (the "New Agreement"), which will be substantially similar in all
material respects to the Current Agreement except as follows. In the Current
Agreement, the Trust has agreed to indemnify Firstar Bank against losses
arising from any untrue statement or alleged untrue statement of a material
fact contained in the Trust's registration statement or prospectus, or from
the omission or alleged omission of a material fact required to make the
statements made not misleading. Similarly, in the Current Agreement Firstar
Bank has agreed to indemnify the Trust against losses arising from statements
made in or omissions from the Trust's registration statement or prospectus to
the extent they were made by or on behalf of Firstar Bank expressly for use in
the Trust's registration statement or prospectus. The New Agreement will
contain no such cross-indemnification provisions.
The New Agreement provides that, subject to the supervision of Firstar
Funds' Board and in accordance with the Firstar REIT Fund's investment
objective, policies and restrictions, FIRMCO will, among other things:
10
<PAGE>
(i) provide a continuous investment program for the Firstar REIT Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents; (ii) determine what securities and
other investments will be purchased, retained or sold by the Firstar REIT
Fund; (iii) vote, give and withhold consents with respect to, and take all
other similar actions relating to, the securities and other investments owned
by the Firstar REIT Fund; (iv) establish and monitor investment criteria and
policies for the Firstar REIT Fund; and (v) provide certain reports to
Firstar's Board concerning the Firstar REIT Fund's investments, securities
transactions and statistical data and economic information.
The New Agreement requires FIRMCO to comply with all applicable rules and
regulations of the Securities and Exchange Commission and to conduct its
activities under the New Agreement in accordance with other applicable law.
FIRMCO will agree to use the same skill and care in providing its services as
it uses in providing services to fiduciary accounts for which it has
investment responsibilities. The New Agreement provides that in executing
portfolio transactions and selecting brokers or dealers, FIRMCO will use its
best efforts to seek on behalf of the Firstar REIT Fund the best overall terms
available. The New Agreement authorizes FIRMCO to consider brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the Firstar REIT Fund and/or
other accounts over which it or its affiliates exercises investment
discretion. In addition, FIRMCO is authorized to take into account the sales
of shares of Firstar Funds in allocating purchase and sale orders for
portfolio securities to brokers or dealers (including brokers or dealers that
are affiliated with FIRMCO or Firstar Funds' principal underwriter) provided
FIRMCO believes that the quality of the transaction and the commissions are
comparable to what they would be with other qualified firms, except that in no
instance will portfolio securities be purchased from or sold to FIRMCO,
Firstar Funds' principal underwriter, or any affiliated person of either,
acting as principal in the transaction, except to the extent permitted by the
Securities and Exchange Commission.
The New Agreement provides that FIRMCO will be paid compensation equal to
(i) a fee at the annual rate of 0.75% of the value of the Firstar REIT Fund's
average daily net assets, plus (ii) 40% of the gross income earned by the
Firstar REIT Fund on each loan of its securities (excluding capital gains and
losses, if any. Pursuant to current policy of the Securities and Exchange
Commission, FIRMCO does not intend to receive compensation for such securities
lending activity. Under the Current Agreement, Firstar Bank is compensated at
the rate of 0.75% of the value of the Select REIT Fund's average daily net
assets.
The New Agreement provides that FIRMCO will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Firstar REIT Fund
in connection with the performance of the New Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from the willful misfeasance,
bad faith or gross negligence on FIRMCO's part in the performance of its
duties or from reckless disregard by FIRMCO of its obligations and duties
under the New Agreement.
The New Agreement may be terminated at any time, without payment of any
penalty, by Firstar Funds (by vote of Firstar's Board or by vote of a majority
of the outstanding voting securities of the Firstar REIT Fund) or by FIRMCO on
sixty days' written notice. The New Agreement will terminate in the event of
its "assignment" (as that term is defined in the 1940 Act).
If the New Agreement is approved as described under "Voting Matters--
Shareholder and Board Approvals" below, the New Agreement will become
effective at the effective time of the Reorganization and will continue in
effect until February 28, 2002. Thereafter, if not terminated, the New
Agreement will continue in effect for successive annual periods, provided such
continuance is approved at least annually (i) by the vote of a majority of
those members of Firstar's Board who are not "interested persons" (as that
term is defined in the 1940 Act) of any party to the New Agreement, cast in
person at a meeting called for the purpose of voting on such approval, and
(ii) by Firstar's Board or by vote of a majority of the outstanding voting
securities of the Firstar REIT Fund.
11
<PAGE>
Additional Information about FIRMCO. Set forth below are the names and
principal occupations of the board of managers and principal executive officer
of FIRMCO.
<TABLE>
<CAPTION>
NAME POSITION WITH FIRMCO OCCUPATION
---- -------------------- ----------
<S> <C> <C>
Bruce Laning.......... Chief Executive Officer President
Marian Zentmyer....... Executive Vice President Chief Equity Investment Officer
John Blixen........... Executive Vice President Senior Portfolio Manager
Robert Webster........ Executive Vice President Personal Trust
Todd Krieg............ Senior Vice President Senior Portfolio Manager
George Schupp......... Senior Vice President Senior Portfolio Manager
</TABLE>
The address of each of the persons listed above is c/o FIRMCO, 777 East
Wisconsin Avenue, 8th Floor, Milwaukee, Wisconsin 53202.
FIRMCO is a wholly-owned subsidiary of Firstar Corporation, which has its
offices at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. FIRMCO does
not serve as an investment adviser to any U.S. registered investment company
which has similar investment objectives to the Firstar REIT Fund.
The following directors and officers of Firstar Funds also hold positions
with FIRMCO:
<TABLE>
<CAPTION>
NAME POSITION WITH FIRSTAR FUNDS POSITION WITH FIRMCO
---- --------------------------- --------------------
<S> <C> <C>
Bruce Laning............ Director, President and Treasurer President and Chief Executive Officer
Laura J. Rauman......... Vice President Senior Vice President
</TABLE>
Evaluation by Firstar Funds' Board. The New Agreement was unanimously
approved by Firstar Funds' Board and by a majority of those members of Firstar
Funds' Board who are not "interested persons" (as that term is defined in the
1940 Act) of any party to the New Agreement at a meeting held on June 16,
2000. In reaching its decision, the Board considered the following factors to
be material and of greatest importance: (1) the Firstar REIT Fund will have
the same investment objective, policies and limitations as those for the
Select REIT Fund; (2) FIRMCO will manage the Firstar REIT Fund's investment
portfolio in a similar manner as Firstar Bank manages the Select REIT Fund's
investment portfolio; (3) the person responsible for managing the Select REIT
Fund's investment portfolio is expected to manage the Firstar REIT Fund's
investment portfolio after the Reorganization; (4) FIRMCO's investment
management qualifications and experience; and (5) the New Agreement will
facilitate the consolidation of the investment operations of FIRMCO and its
affiliates. The Trust's Board was not required by law to approve the New
Agreement because it is an agreement between Firstar Funds and FIRMCO.
VOTING MATTERS
THE TRUST'S BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSALS.
General Information. The Trust's Board is furnishing this Proxy Statement
in connection with the solicitation of proxies for the Special Meeting. It is
expected that the solicitation of proxies will be primarily by mail. Officers
and service contractors of the Trust and Firstar Funds may also solicit
proxies by telephone or otherwise. Shareholders may vote by (1) mail by
marking, signing, dating and returning the enclosed proxy card in the enclosed
postage-paid envelope; (2) by touch-tone voting; or (3) by on-line voting. Any
shareholder giving a proxy may revoke it at any time before it is exercised by
submitting to the Trust a written notice of revocation or a subsequently
executed proxy or by attending the Special Meeting and voting in person.
Only shareholders of record of the Select REIT Fund at the close of
business on the Record Date will be entitled to vote at the Special Meeting.
On the Record Date, there were 11,435.299 Class B Shares and 4,075,208.718
Class Y Shares of the Select REIT Fund outstanding and entitled to vote.
12
<PAGE>
Each whole and fractional share of each class of the Select REIT Fund is
entitled to a whole or fractional vote as the case may be.
If an accompanying proxy card is executed and returned in time for the
Special Meeting, the shares covered thereby will be voted in accordance with
the proxy on all matters that may properly come before the Special Meeting. If
no specification is made on the proxy card, your proxy will be voted FOR the
Proposal. You may also vote your proxy by toll-free phone call or on-line
voting as described on the enclosed proxy card.
Shareholder and Board Approvals. The Reorganization Agreement and
Investment Advisory Agreement are being submitted for approval at the Special
Meeting by the Select REIT Fund's shareholders pursuant to the Trust's
Agreement and Declaration of Trust and Bylaws. The Reorganization Agreement
was unanimously approved by the Trust's Board at a meeting held on August 15,
2000. The Investment Advisory Agreement was unanimously approved by Firstar's
Board at a meeting held on June 16, 2000. The Reorganization Agreement and the
Investment Advisory Agreement must be approved by the vote of a majority of
all outstanding voting securities of the Select REIT Fund, as defined in the
1940 Act. The vote of a majority of outstanding voting securities means the
vote at the Special Meeting of (i) 67% or more of the voting securities
present at the Special Meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy, or (ii)
more than 50% of the outstanding voting securities of the Select REIT Fund,
whichever is less.
Principal Shareholders. Following are the name, address and share ownership
of each person known to the Trust to have record ownership with respect to 5%
or more of the Select REIT Fund as of the Record Date.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE OF
NAME AND ADDRESS SHARES OWNED SELECT REIT FUND
---------------- ------------- ----------------
<S> <C> <C>
Firstar Bank, N.A. 3,412,223.190 83.5%
425 Walnut Street
Cincinnati, OH 45202
</TABLE>
The percentage of the Select REIT Fund that would be owned by the
shareholders named above upon consummation of the Reorganization based on
their holdings shown above is expected to be substantially the same.
For purposes of the 1940 Act, any person who owns directly or through one
or more controlled companies more than 25% of the voting securities of a
company is presumed to "control" such company. Accordingly, to the extent that
a shareholder is identified above as the beneficial holder of more than 25% of
the outstanding shares of the Select REIT Fund, or is identified as the holder
of record of more than 25% of the outstanding shares of the Select REIT Fund
and has voting and/or investment power, such shareholder may be presumed to
control the Select REIT Fund.
The Trust and Firstar Funds have been advised by Firstar Bank that with
respect to the Shares of the Select REIT Fund over which Firstar Bank and its
affiliates have voting power, such shares may be voted by Firstar Bank itself
in its capacity as fiduciary.
Quorum. A majority of shares entitled to vote, represented in person or by
proxy, shall be a quorum for the transaction of business at the Special
Meeting. In the event that a quorum is not present at the Special Meeting, or
in the event that a quorum is present at the Special Meeting but sufficient
votes to approve the Reorganization are not received by the Trust, one or more
adjournment(s) may be proposed to permit further solicitation of proxies. Any
adjourned session or sessions may be held after the date set for the original
Special Meeting without notice except announcement at the Special Meeting. Any
such adjournment(s) will require the affirmative vote of a majority of the
Select REIT Fund shares that are represented at the Special Meeting in person
or by proxy. If a quorum is present, the persons named as proxies will vote
those proxies which they are entitled to vote FOR a Proposal in favor of such
adjournment(s), and will vote those proxies required to be voted AGAINST a
Proposal against any adjournment(s). For purposes of determining the presence
of a quorum for
13
<PAGE>
transacting business at the Special Meeting, abstentions, but not broker "non-
votes" (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owners or other persons
entitled to vote shares on a Proposal with respect to which the brokers or
nominees do not have discretionary power), will be treated as shares that are
present at the Special Meeting but which have not been voted. Abstentions and
broker "non-votes" will have the effect of a vote against a Proposal for
purposes of obtaining the requisite approval of that Proposal.
Annual Meetings and Shareholder Meetings. Neither the Trust nor Firstar
Funds presently intends to hold annual meetings of shareholders for the
election of trustees or directors and other business unless otherwise required
by the 1940 Act or applicable state law. Under certain circumstances, however,
holders of at least 25% of the outstanding shares of the Trust have the right
to call a meeting of shareholders. Any proposal by a shareholder for
consideration at a subsequent meeting, if any, of shareholders should be sent
in writing to 431 North Pennsylvania Street, Indianapolis, Indiana 46204.
Firstar Funds' Board of Directors has adopted a By-Law in accordance with
the Wisconsin Business Corporation Law that requires Firstar Funds to hold an
annual shareholder meeting for the election of directors and other business
only in a year in which certain specified items are required to be acted upon
by shareholders under the 1940 Act. Under certain circumstances, however,
shareholders have the right to call a meeting of shareholders to consider the
removal of one or more directors or other business. To the extent required by
law, Firstar Funds will assist in shareholder communications in such matters.
ADDITIONAL INFORMATION
Beneficial Ownership of Shares by Trustees. As of the Record Date, the
trustees of the Trust held as a group beneficially or of record less than 1%
of the outstanding shares of the Fund.
Other Matters. The Trust's Board of Trustees knows of no other matters to
be presented at the Meeting other than as set forth above. However, if any
other matters properly come before the meeting that the Trust did not have
notice of a reasonable time prior to the mailing of this Proxy Statement, the
holders of the proxy will vote the shares represented by the proxy on such
matters in accordance with their best judgment, and discretionary authority to
do so is included in the proxy.
OCTOBER 6, 2000
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING ARE
REQUESTED TO MARK, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE. YOU ALSO MAY VOTE YOUR PROXY BY TOLL FREE PHONE CALL OR ON-
LINE AS DESCRIBED ON THE ENCLOSED PROXY CARD. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
THE TRUST WILL FURNISH TO SHAREHOLDERS UPON REQUEST, WITHOUT CHARGE, COPIES
OF ITS ANNUAL REPORT TO SHAREHOLDERS CONTAINING AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED MARCH 31, 2000 (THE "ANNUAL REPORT"). REQUESTS FOR
COPIES OF THE ANNUAL REPORT SHOULD BE DIRECTED TO THE TRUST AT THE ADDRESS AT
THE BEGINNING OF THIS PROXY STATEMENT OR BY TELEPHONE AT 1-800-677-FUND. THE
ANNUAL REPORT IS NOT TO BE REGARDED AS PROXY SOLICITING MATERIAL.
14
<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF
REORGANIZATION
BY AND BETWEEN
FIRSTAR FUNDS, INC.
AND
FIRSTAR SELECT FUNDS
DATED AS OF AUGUST 15, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. CERTAIN DEFINITIONS.................................................. 1
2. THE REORGANIZATION................................................... 2
3. CALCULATIONS......................................................... 2
4. VALUATION OF ASSETS.................................................. 3
5. VALUATION TIME....................................................... 3
6. EFFECTIVE TIME OF THE REORGANIZATION................................. 4
7. TERMINATION OF SELECT................................................ 4
8. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
SELECT............................................................... 4
9. CERTAIN REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF
FIRSTAR.............................................................. 6
10. SHAREHOLDER ACTION ON BEHALF OF THE SELECT FUND...................... 7
11. SHAREHOLDER ACTION ON BEHALF OF FIRSTAR.............................. 8
12. N-1A POST-EFFECTIVE AMENDMENT AND PROXY SOLICITATION MATERIALS....... 8
13. FIRSTAR CONDITIONS................................................... 8
14. SELECT CONDITIONS.................................................... 10
15. TAX OPINION.......................................................... 11
16. TAX DOCUMENTS........................................................ 12
17. FURTHER ASSURANCES................................................... 12
18. TERMINATION OF REPRESENTATIONS AND WARRANTIES........................ 12
19. TERMINATION OF AGREEMENT............................................. 12
20. AMENDMENT AND WAIVER................................................. 12
21. GOVERNING LAW........................................................ 12
22. SUCCESSORS AND ASSIGNS............................................... 13
23. BENEFICIARIES........................................................ 13
24. NOTICES.............................................................. 13
25. EXPENSES............................................................. 13
26. ENTIRE AGREEMENT..................................................... 13
27. COUNTERPARTS......................................................... 13
28. NO BROKERS OR FINDERS................................................ 14
29. VALIDITY............................................................. 14
30. EFFECT OF FACSIMILE SIGNATURE........................................ 14
31. HEADINGS............................................................. 14
32. FIRSTAR LIABILITY.................................................... 14
33. SELECT LIABILITY..................................................... 14
</TABLE>
i
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
the 15th day of August, 2000, by Firstar Funds, Inc. ("Firstar"), a Wisconsin
corporation, and Firstar Select Funds ("Select"), a business trust established
under the laws of the State of Ohio.
BACKGROUND
WHEREAS, each of the parties hereto is an open-end management investment
company registered with the Securities and Exchange Commission (the "SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, Select offers one investment portfolio known as the Firstar Select
REIT-Plus Fund (the "Select Fund");
WHEREAS, Firstar has recently organized, or will soon organize, an
investment portfolio known as the Firstar REIT Fund (the "Firstar Fund");
WHEREAS, each of the parties hereto desires, upon the terms and subject to
the conditions set forth herein, to enter into and perform the reorganization
described herein (the "Reorganization"), pursuant to which, among other
things, at the time hereinafter set forth, (1) the Select Fund shall transfer
substantially all of its Assets (as hereinafter defined), subject to
substantially all of its Liabilities (as hereinafter defined), to the Firstar
Fund, in exchange for Institutional Shares issued by the Firstar Fund (the
shares issued to the Select Fund by the Firstar Fund in exchange for
substantially all of the Assets, subject to substantially all of the
Liabilities, of the Select Fund in connection with the Reorganization,
collectively, "Firstar Fund Shares"), and (2) the Select Fund shall then
distribute to its shareholders of record, the Firstar Fund Shares received by
or on behalf of the Select Fund;
WHEREAS, each of the parties intends that the Firstar Fund will have
nominal assets and liabilities before the Reorganization and will continue the
investment operations of the Select Fund; and
WHEREAS, the parties intend that in connection with the Reorganization,
Select shall be deregistered and terminated as described in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:
1. Certain Definitions. As used herein,
(a) The term "Assets" shall mean all property and assets of every
description and of any nature whatsoever including, without limitation,
cash, cash equivalents, securities, claims (whether absolute or contingent,
known or unknown, accrued or unaccrued), receivables (including dividend
and interest receivables), deferred or prepaid expenses, good will and
other intangible property, books and records, and all interests, rights,
privileges and powers, other than cash in an amount necessary to pay any
unpaid dividends and distributions as provided in Section 2(d) hereof.
(b) The term "Liabilities" shall mean all existing and future
liabilities and obligations of any nature, whether accrued, absolute,
contingent or otherwise, including, with respect to Select and the Select
Fund, any obligation to indemnify Select's current Trustees, acting in
their capacities as such, to the fullest extent permitted by law and
Select's Amended and Restated Declaration of Trust (the "Declaration of
Trust") and By-Laws, in each case, as in effect as of the date of this
Agreement.
<PAGE>
2. The Reorganization.
(a) At the Effective Time of the Reorganization (as hereinafter
defined), (i) the Select Fund shall transfer, assign and convey to the
Firstar Fund substantially all of the Assets, subject to substantially all
of the Liabilities, of the Select Fund, and (ii) the Firstar Fund shall
accept all such Assets and assume all such Liabilities, such that at and
after the Effective Time of the Reorganization: (1) substantially all of
the Assets of the Select Fund shall become and be Assets of the Firstar
Fund, (2) substantially all of the Liabilities of the Select Fund shall
become and be liabilities of, and shall attach to, the Firstar Fund, and
(3) such Liabilities of the Select Fund may thenceforth be enforced only
against the Firstar Fund to the same extent as if such Liabilities had been
incurred by the Firstar Fund, subject to any defense and/or set off that
Select or the Select Fund was entitled to assert immediately prior to the
Effective Time of the Reorganization with respect to any such Liability,
and subject to any defense and/or set off that Firstar or the Firstar Fund
may from time to time be entitled to assert against the creditor thereof.
(b) In exchange for the transfer of substantially all of the Assets of
the Select Fund to the Firstar Fund as provided in paragraph (a) above, the
Firstar Fund shall assume substantially all of the Liabilities of the
Select Fund as provided in paragraph (a) above and shall also
simultaneously issue, at the Effective Time of the Reorganization, to the
Select Fund, the number of full and fractional (to the third decimal place)
Firstar Fund Shares of the Firstar Fund, determined and adjusted as
provided in Section 3 hereof.
(c) Immediately upon receipt of the Firstar Fund Shares of the Firstar
Fund in accordance with paragraph (b) above, the Select Fund shall
distribute, in complete liquidation, pro rata to the shareholders of record
of the Select Fund at the Effective Time of the Reorganization (such
shareholders of record of the Select Fund as of such time, collectively,
the "Recordholders"), the Firstar Fund Shares that have been so received as
follows: Recordholders of Class Y Shares of the Select Fund will be
credited with full and fractional Institutional Shares of the Firstar Fund
with respect to such Class Y Shares and Recordholders of Class B Shares of
the Select Fund will be credited with full and fractional Institutional
Shares of the Firstar Fund with respect to such Class B Shares.
(d) At the Effective Time of the Reorganization, each shareholder of
record of the Select Fund as of the record date (the "Distribution Record
Date") with respect to any unpaid dividends and other distributions that
were declared before the Effective Time of the Reorganization shall have
the right to receive such unpaid dividends and distributions with respect
to the shares of the Select Fund that such person held on the Distribution
Record Date.
(e) Promptly upon receipt of instructions from Select delivered pursuant
to this paragraph (e), Firstar shall, in accordance with such instructions,
record on its books the ownership, by the Recordholders, of the number of
Firstar Fund Shares distributed to such Recordholders.
(f) Promptly after the Select Fund has liquidated as provided in
paragraph (c) above, Select shall cancel on its books all of the shares
(including, without limitation, any treasury shares) of the Select Fund,
and any such shares issued and outstanding prior to such cancellation shall
thereafter represent only the right to receive the Firstar Fund Shares
issued to the Select Fund in accordance with paragraph (b) above.
(g) Upon completion of the tasks required by paragraphs (a) through (f)
above with respect to the Select Fund, the transfer books of Select with
respect to the Select Fund shall be permanently closed.
3. Calculations.
(a) The number of Firstar Fund Shares issued to the Select Fund pursuant
to Section 2(b) hereof will be determined as follows:
(1) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of the Select Fund's Assets that are conveyed,
less the Liabilities that are assumed, at the Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to
Class Y Shares of the Select Fund shall be divided by the net asset
value of one Institutional Share of the Firstar Fund that is to be
delivered with respect thereto; and
2
<PAGE>
(2) The value (determined as of the Applicable Valuation Time (as
hereinafter defined)) of the Select Fund's Assets that are conveyed,
less the Liabilities that are assumed, at the Effective Time of the
Reorganization (as hereinafter defined) and that are attributable to
Class B Shares of the Select Fund shall be divided by the net asset
value of one Institutional Share of the Firstar Fund that is to be
delivered with respect thereto.
(b) The net asset value of the Firstar Fund Shares shall be computed at
the Valuation Time (as hereinafter defined) in the manner set forth in the
Firstar Fund's then current prospectus under the Securities Act of 1933, as
amended (the "1933 Act"). The net asset value of shares of each class of
the Select Fund shall be computed at the Valuation Time in the manner set
forth in the Select Fund's then current prospectus under the 1933 Act.
4. Valuation of Assets.
(a) The value of the Assets of the Select Fund shall be the value of
such Assets computed as of the time at which the Select Fund's net asset
value is calculated at the Valuation Time (as hereinafter defined). The net
asset value of the Assets of the Select Fund to be transferred to the
Firstar Fund shall be computed by Select and shall be subject to adjustment
by the amount, if any, agreed to by Select and the Select Fund and Firstar
and the Firstar Fund. In determining the value of the securities
transferred by the Select Fund to the Firstar Fund, each security shall be
priced in accordance with the pricing policies and procedures of the Select
Fund as described in its then current prospectus and statement of
additional information. For such purposes, price quotations and the
security characteristics relating to establishing such quotations shall be
determined by Select, provided that such determination shall be subject to
the approval of Firstar. Firstar and Select agree to use all commercially
reasonable efforts to resolve, prior to the Valuation Time, any material
pricing differences between the prices of portfolio securities determined
in accordance with the pricing policies and procedures of the Firstar Fund
and those determined in accordance with the pricing policies and procedures
of the Select Fund.
(b) At least fifteen (15) business days prior to the Effective Time of
the Reorganization (as hereinafter defined), the Select Fund will provide
the Firstar Fund with a schedule of its securities and other Assets and
Liabilities of which it is aware, and the Firstar Fund will provide the
Select Fund with a copy of the current investment objective and policies of
the Firstar Fund. The Select Fund reserves the right to sell any of the
securities or other Assets shown on the list of the Select Fund's Assets
prior to the Effective Time of the Reorganization but will not, without the
prior approval of Firstar, acquire any additional securities other than
securities which the Firstar Fund is permitted to purchase in accordance
with its stated investment objective and policies. At least ten (10)
business days prior to the Effective Time of the Reorganization, the
Firstar Fund will advise the Select Fund of any investments of the Select
Fund shown on such schedule which the Firstar Fund would not be permitted
to hold, pursuant to its stated investment objective and policies or
otherwise. In the event that the Select Fund holds any investments that the
Firstar Fund would not be permitted to hold under its stated investment
objective or policies, the Select Fund, if requested by the Firstar Fund
and to the extent permissible and consistent with the Select Fund's own
investment objective and policies, will dispose of such securities prior to
the Effective Time of the Reorganization.
5. Valuation Time. The valuation time shall be 4:00 p.m., Eastern Time, on
November 24, 2000, or such earlier or later date and time as may be mutually
agreed in writing by an authorized officer of each of the parties (the
"Valuation Time"). Notwithstanding anything herein to the contrary, in the
event that at the Valuation Time, (a) the New York Stock Exchange shall be
closed to trading or trading thereon shall be restricted or (b) trading or the
reporting of trading on such exchange or elsewhere shall be disrupted so that,
in the judgment of Firstar or Select, accurate appraisal of the value of the
net assets of the Firstar Fund or the Select Fund is impracticable, the
Valuation Time shall be postponed until the first business day after the day
when trading shall have been
3
<PAGE>
fully resumed without restriction or disruption, reporting shall have been
restored and accurate appraisal of the value of the net assets of the Firstar
Fund and the Select Fund is practicable in the judgment of Firstar and Select.
6. Effective Time of the Reorganization. Delivery by the Select Fund of its
Assets to the Firstar Fund, delivery by the Firstar Fund of its Firstar Fund
Shares to the Select Fund, and liquidation of the Select Fund, in each case,
pursuant to Section 2 hereof, shall occur at the opening of business on the
next business day following the Valuation Time (or on such other date
following the Valuation Time as is agreed to in writing by an authorized
officer of each of the parties). The date and time at which the above-
described actions are taken shall be the "Effective Time of the
Reorganization". To the extent any Assets of the Select Fund are, for any
reason, not transferred to the Firstar Fund at the Effective Time of the
Reorganization, Select shall cause such Assets to be transferred in accordance
with this Agreement at the earliest practicable date thereafter.
7. Termination of Select. Promptly following the Effective Time of the
Reorganization, Select shall file an application pursuant to Section 8(f) of
the 1940 Act for an order declaring that Select has ceased to be an investment
company; provided that until such order is granted, Select shall continue to
comply with all of its obligations as a registered investment company under
the 1940 Act and under any and all other applicable state and federal
securities laws (including, in the case of each of the foregoing, the rules
and regulations thereunder). Select shall, promptly after the Effective Time
of the Reorganization, file any final regulatory reports, including, but not
limited to, any Form N-SAR and Rule 24f-2 Notice, with respect to the Select
Fund. All reporting and other obligations of Select shall remain the exclusive
responsibility of Select up to and including the date on which Select is
deregistered and terminated. In addition, promptly following the Effective
Time of the Reorganization, Select shall be terminated pursuant to its
Declaration of Trust and shall take all other steps necessary and proper to
effect its complete termination. Without limiting the generality of the
foregoing, (a) the affairs of Select shall be immediately wound up, its
contracts discharged and its business liquidated; and (b) the Trustees of
Select shall execute and lodge among the records of Select an instrument in
writing setting forth the fact of such termination.
8. Certain Representations, Warranties, Covenants and Agreements of
Select. Select, on behalf of itself and the Select Fund, represents, warrants,
covenants and agrees as follows:
(a) Select is a business trust duly created pursuant to its Declaration
of Trust under the laws of the State of Ohio on February 28, 1997 and is
validly existing and in good standing under the laws of the State of Ohio.
(b) Select is duly and appropriately registered with the SEC as an open-
end, management investment company under the 1940 Act and its registration
with the SEC as such an investment company is in full force and effect as
of the date hereof.
(c) Select and the Select Fund each currently has the power to own all
of its Assets and, subject to the approval of shareholders referred to in
Section 10 hereof, to carry out and consummate the transactions
contemplated herein. Select and the Select Fund each currently has all
necessary federal, state and local authorizations, licenses and approvals
necessary or desirable to carry on its business as such business is now
being conducted and, upon receipt by Select of an exemptive order under
Section 17 of the 1940 Act, to consummate the transactions contemplated by
this Agreement.
(d) This Agreement has been duly and validly authorized, executed and
delivered by Select, and represents the legal, valid and binding obligation
of Select, enforceable against Select in accordance with the terms hereof,
subject as to enforcement to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium, fraudulent transfer or conveyance,
and other similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles and provided that the
provisions of this Agreement intended to limit liability for particular
matters to an investment portfolio and its assets, including but not
limited to Sections 32 and 33 of this Agreement, may not be enforceable.
The execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated by this Agreement will not, violate
Select's Declaration of Trust or By-Laws or any other organizational
document
4
<PAGE>
of Select or any agreement, contract or other arrangement to which Select
is a party or by which Select or its properties or Assets may be bound,
subject or affected.
(e) The Select Fund has elected to qualify, and has qualified as of and
since its first taxable year, as a regulated investment company under Part
I of Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of
1986, as amended (the "Code"), and the Select Fund currently qualifies, and
shall continue to qualify, as a regulated investment company under such
Part for its taxable year that includes the date on which the Effective
Time of the Reorganization occurs.
(f) All federal, state, local and foreign income, profits, franchise,
sales, withholding, customs, transfer and other taxes, including, without
limitation, interest, additions to tax, and penalties thereon
(collectively, "Taxes"), that relate to the Assets of Select or of the
Select Fund, and that are either due or properly shown to be due on any
return filed by Select or by the Select Fund have been fully and timely
paid or provided for; and, to Select's knowledge, there are no levies,
liens, or other encumbrances relating to Taxes existing, threatened or
pending with respect to the Assets of Select (or with respect to any Assets
of the Select Fund).
(g) All federal and other tax returns and reports of Select and the
Select Fund required by law to be filed on or before the Effective Time of
the Reorganization, have been or will be filed in a timely manner, and all
federal and other taxes owed by Select on behalf of the Select Fund, have
been or will be timely paid so far as due, and to the best of Select's
knowledge, no such return is currently under audit and no assessment has
been asserted with respect to any such return.
(h) The financial statements of the Select Fund for its fiscal year
ended March 31, 2000, examined by McCurdy & Associates CPA's, Inc., a copy
of which has been previously furnished to Firstar, present fairly and in
conformity with generally accepted accounting principles consistently
applied (i) the financial condition of the Select Fund as of the date
indicated therein and (ii) the results of operations of the Select Fund for
the periods indicated therein.
(i) At the Valuation Time and the Effective Time of the Reorganization,
all Liabilities of the Select Fund which are required to be reflected in
the net asset value per share of shares of the Select Fund in accordance
with applicable law are reflected in the net asset value per share of the
Select Fund.
(j) To Select's knowledge, there are currently, and at the Valuation
Time and the Effective Time of the Reorganization there shall be, no legal,
administrative or other proceedings or investigations pending or, to
Select's knowledge, threatened against or otherwise involving Select or the
Select Fund which could result in liability on the part of Select or the
Select Fund.
(k) Subject to the approval of shareholders referred to in Section 10
hereof, at both the Valuation Time and the Effective Time of the
Reorganization, Select, on behalf of the Select Fund, shall have full
right, power and authority to sell, assign, transfer and deliver the Assets
of the Select Fund. Upon delivery and payment for the Assets of the Select
Fund as contemplated in Section 2(b) above, the Firstar Fund shall acquire
good and marketable title to the Assets of the Select Fund, in each case,
free and clear of all liens and encumbrances, and subject to no
restrictions on the ownership or transfer thereof (except as imposed by
federal or state securities laws).
(l) Subject to the approval of shareholders referred to in Section 10
hereof, no consent, approval, authorization or order of any court or
governmental authority, or of any other person or entity, is required for
the consummation by Select and by the Select Fund of the transactions
contemplated by this Agreement, except as may be required by the 1933 Act,
the Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940
Act or state securities laws (including, in the case of each of the
foregoing, the rules and regulations thereunder).
(m) At the time of the shareholders' meeting referred to in Section 10
hereof and at the Effective Time of the Reorganization, the proxy statement
of Select shall, with respect to Select and the Select Fund: (i) comply in
all material respects with the provisions of the 1934 Act and the 1940 Act
(including, in the case of each of the foregoing, the rules and regulations
thereunder), and (ii) not contain any untrue statement of
5
<PAGE>
material fact or omit to state a material fact that is required to be
stated therein or that is necessary to make the statements thereon not
misleading.
(n) All of the issued and outstanding shares of the Select Fund have
been duly and validly issued, are fully paid and non-assessable, and were
offered for sale and sold in conformity with all applicable federal and
state securities laws (including, in the case of each of the foregoing, the
rules and regulations thereunder). All shares of the Select Fund issued on
or after the date hereof shall be duly and validly issued, fully paid and
non-assessable and offered for sale and sold in conformity with all
applicable federal and state securities laws (including, in the case of
each of the foregoing, the rules and regulations thereunder). No
shareholder of the Select Fund currently has, or will hereafter have, any
statutory or contractual preemptive right of subscription or purchase in
respect of any shares of the Select Fund.
(o) Select shall not sell or otherwise dispose of any Firstar Fund
Shares received in the transactions contemplated herein, except in
distribution to the Recordholders as contemplated herein.
9. Certain Representations, Warranties, Covenants and Agreements of
Firstar. Firstar, on behalf of itself and the Firstar Fund, represents,
warrants, covenants and agrees as follows:
(a) Firstar is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin.
(b) Firstar is duly and appropriately registered with the SEC as an
open-end, management investment company under the 1940 Act and its
registration with the SEC as such an investment company is in full force
and effect as of the date hereof.
(c) Firstar currently has, and upon effectiveness of the Firstar Post-
Effective Amendment (as hereinafter defined) the Firstar Fund will have,
the power to own all of its Assets and, subject to the approval of
shareholders and the filing of the Articles of Amendment to the Articles of
Incorporation of Firstar referred to in Section 11 hereof, to carry out and
consummate the transactions contemplated herein. Firstar currently has, and
upon effectiveness of the Firstar Post-Effective Amendment the Firstar Fund
will have, all necessary federal, state and local authorizations, licenses
and approvals necessary or desirable to carry on its business as such
business is now being conducted and, upon the filing of the Articles of
Amendment to the Articles of Incorporation of Firstar referred to in
Section 11 hereof and receipt by Firstar of an exemptive order under
Section 17 of the 1940 Act, to consummate the transactions contemplated by
this Agreement.
(d) This Agreement has been duly and validly authorized, executed and
delivered by Firstar, and represents the legal, valid and binding
obligation of Firstar, enforceable against Firstar in accordance with the
terms hereof, subject as to enforcement to the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent transfer or
conveyance, and other similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles and provided
that the provisions of this Agreement intended to limit liability for
particular matters to an investment portfolio and its assets, including but
not limited to Sections 32 and 33 of this Agreement, may not be
enforceable. Subject to the filing of the Articles of Amendment to the
Articles of Incorporation of Firstar referred to in Section 11 hereof, the
execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated by this Agreement will not, violate the
Articles of Incorporation or Bylaws of Firstar or any other organizational
document of Firstar, or any agreement, contract or other arrangement to
which Firstar is a party or by which Firstar or its properties or Assets
may be bound, subject or affected.
(e) The Firstar Fund intends to qualify, and to continue to qualify, as
a regulated investment company under Part I of Subchapter M of Subtitle A,
Chapter 1, of the Code.
(f) All Taxes that relate to Assets of Firstar or of the Firstar Fund,
and that are either due or properly shown to be due on any return filed by
Firstar or by the Firstar Fund, have been fully and timely paid or provided
for; and to Firstar's knowledge, there are no levies, liens or other
encumbrances relating to Taxes existing, threatened or pending with respect
to the Assets of Firstar (or with respect to any Assets of the Firstar
Fund).
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(g) All federal and other tax returns and reports of Firstar and the
Firstar Fund required by law to be filed on or before the Effective Time of
the Reorganization have been or will be filed in a timely manner, and all
federal and other taxes owed by Firstar on behalf of the Firstar Fund have
been or will be timely paid so far as due, and to the best of Firstar's
knowledge, no such return is currently under audit and no assessment has
been asserted with respect to any such return.
(h) The financial statements of Firstar for its fiscal year ended
October 31, 1999, examined by PricewaterhouseCoopers LLP, a copy of which
has been previously furnished to Select, present fairly and in conformity
with generally accepted accounting principles consistently applied (i) the
financial condition of Firstar as of the date indicated therein and (ii)
the results of operations of Firstar for the periods indicated.
(i) At the Valuation Time and the Effective Time of the Reorganization,
all Liabilities of the Firstar Fund which are required to be reflected in
the net asset value per share of the Firstar Fund Shares issued by the
Firstar Fund pursuant to this Agreement in accordance with applicable law
are reflected in the net asset value per share of the Firstar Fund.
(j) To Firstar's knowledge, there are currently, and at the Valuation
Time and the Effective Time of the Reorganization there shall be, no legal,
administrative or other proceedings or investigations pending or, to
Firstar's knowledge, threatened against or otherwise involving Firstar or
the Firstar Fund which could result in liability on the part of Firstar or
the Firstar Fund.
(k) At the time of the shareholders' meeting referred to in Section 10
hereof and at the Effective Time of the Reorganization, the proxy statement
of Select shall, with respect to Firstar and the Firstar Fund: (i) comply
in all material respects with the provisions of the 1934 Act and the 1940
Act (including, in the case of each of the foregoing, the rules and
regulations thereunder), and (ii) not contain any untrue statement of
material fact or omit to state a material fact that is required to be
stated therein or that is necessary to make the statements thereon not
misleading.
(l) No consent, approval, authorization or order of any court or
governmental authority, or of any other person or entity is required for
the consummation by Firstar and by the Firstar Fund of the transactions
contemplated by this Agreement except (i) the filing of Articles of
Amendment to the Articles of Incorporation of Firstar referred to in
Section 11 hereof and (ii) as may be required by the 1933 Act, 1934 Act,
the 1940 Act or state securities laws (including, in the case of each of
the foregoing, the rules and regulations thereunder).
(m) The Firstar Fund Shares to be issued and delivered to the Select
Fund pursuant to the terms hereof shall have been duly authorized as of the
Effective Time of the Reorganization and, when so issued and delivered,
shall be registered under the 1933 Act, duly and validly issued, and fully
paid and non- assessable, and no shareholder of the Firstar Fund shall have
any statutory or contractual preemptive right of subscription or purchase
in respect thereof.
(n) For the period beginning at the Effective Time of the Reorganization
and ending not less than four years thereafter, Firstar shall provide or
cause to be provided, liability coverage for the officers and Trustees of
Select which covers the actions of such Trustees and officers of Select for
the period they served as such and is at least comparable to the liability
coverage currently applicable to the Trustees and officers of Select.
Firstar agrees that all rights to indemnification existing in favor of the
Trustees of Select, acting in their capacities as such, under Select's
Declaration of Trust as in effect as of the date of this Agreement shall
survive the Reorganization as obligations of Firstar, shall continue in
full force and effect without any amendment thereto, and shall constitute
rights which may be asserted against Firstar.
10. Shareholder Action on Behalf of the Select Fund. As soon as practicable
after SEC clearance of the proxy materials referred to in Section 11(b) below,
but in any event prior to the Effective Time of the Reorganization, the Board
of Trustees of Select shall call, and Select shall hold, a meeting of the
shareholders of the Select Fund for the purpose of considering and voting
upon:
(a) Approval of this Agreement and the transactions contemplated hereby,
including, without limitation, the transfer by the Select Fund to the
Firstar Fund of substantially all of the Assets belonging to
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the Select Fund and the assumption by the Firstar Fund of substantially all
of the Liabilities of the Select Fund, in exchange for the Firstar Fund
Shares issued by the Firstar Fund to the Select Fund in accordance with,
and at the time set forth in, Section 2 hereof;
(b) The liquidation of the Select Fund through the distribution of the
Firstar Fund Shares received by such Select Fund to the Recordholders of
the Select Fund as described in this Agreement;
(c) The deregistration of Select under the 1940 Act and the termination
of Select under state law;
(d) Approval of the Investment Advisory Agreement between Firstar and
Firstar Investment Research & Management Company, LLC ("FIRMCO") with
respect to the Firstar Fund; and
(e) Such other matters as may be determined by the Board of Trustees of
Select.
11. Shareholder Action on Behalf of Firstar. Prior to the Effective Time of
the Reorganization and as a condition to the consummation of the transactions
contemplated hereby, (i) the Board of Directors of Firstar shall call, and
Firstar shall hold, a meeting of the shareholders of Firstar for the purpose of
considering and voting upon the approval of Articles of Amendment to the
Articles of Incorporation of Firstar to enable Firstar to issue more than 30
classes of common stock (the "Articles of Amendment"), and such other matters
as may be determined by the Board of Directors of Firstar, and (ii) provided
that the approval required of Firstar's shareholders is obtained, the Articles
of Amendment shall be filed with the office of the Department of Financial
Institutions of the State of Wisconsin.
12. N-1A Post-Effective Amendment and Proxy Solicitation Materials.
(a) Firstar shall file (i) a post-effective amendment to its
Registration Statement on Form N-1A (File Nos. 33-18255 and 811-5380) with
the SEC as promptly as practicable registering the Firstar Fund and its
shares under the 1933 Act and 1940 Act, and such supplements and amendments
thereto as may be required (the "Firstar Post-Effective Amendment"), and
(ii) proxy solicitation materials of Firstar with the SEC pursuant to
Section 14(a) of the 1934 Act and Section 20(a) of the 1940 Act with
respect to the matters referred to in Section 11 above, and such
supplements and amendments thereto as may be required.
(b) Select shall file proxy solicitation materials of the Select Fund
with the SEC pursuant to Section 14(a) of the 1934 Act and Section 20(a) of
the 1940 Act with respect to the matters referred to in Section 10 above,
and such supplements and amendments thereto as may be required.
13. Firstar Conditions. The obligations of Firstar (and of the Firstar Fund)
hereunder shall be subject to the following conditions precedent:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved by the Board of Trustees of Select (including the
determinations required by Rule 17a-8(a) under the 1940 Act) and by the
shareholders of the Select Fund, in each case, in the manner required by
law.
(b) The Articles of Amendment shall have been approved by the
shareholders of Firstar and filed with the office of the Department of
Financial Institutions of the State of Wisconsin.
(c) Select shall have duly executed and delivered to Firstar, on behalf
of the Select Fund, such bills of sale, assignments, certificates and other
instruments of transfer ("Transfer Documents") as Firstar may deem
necessary or desirable to transfer to the Firstar Fund all of the right,
title and interest of the Select Fund in and to substantially all of the
Assets of the Select Fund. In each case, the Assets of the Select Fund so
transferred shall be accompanied by all necessary state stock transfer
stamps or cash for the appropriate purchase price therefor.
(d) All representations and warranties of Select made in this Agreement
shall be true and correct in all material respects on the date hereof, at
the Valuation Time and at the Effective Time of the Reorganization, in each
case, as if made at and as of such time. As of the Valuation Time and at
the Effective Time of the Reorganization, there shall have been no material
adverse change in the financial position of the Select Fund or of Select
since the date of the financial statements referred to in Section 8(h),
other than those changes
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<PAGE>
(including, without limitation, changes due to net redemptions) incurred in
the ordinary course of business as an investment company since the date of
the financial statements referred to in Section 8(h). At the Effective Time
of the Reorganization, Firstar shall have received a certificate from the
President or Vice President of Select, dated as of such date, certifying on
behalf of Select that as of such date each of the conditions set forth in
this clause (d) have been met.
(e) Firstar shall have received an opinion of Brown, Cummins & Brown
Co., L.P.A., counsel to Select, addressed to Firstar, in form and substance
reasonably satisfactory to Firstar and dated the Effective Time of the
Reorganization, to the effect that as of the date of such opinion, and
subject to qualifications and conditions reasonably acceptable to Firstar:
(i) Select is a business trust duly created pursuant to its Declaration of
Trust under the laws of the State of Ohio, and is validly existing and in
good standing under the laws of the State of Ohio; (ii) the shares of the
Select Fund outstanding at the Effective Time of the Reorganization are
duly authorized, validly issued, fully paid and non-assessable by the
Select Fund, and to such counsel's knowledge, no shareholder of the Select
Fund has any statutory preemptive right to subscription or purchase in
respect thereof; (iii) this Agreement and the Transfer Documents have been
duly and validly authorized, executed and delivered by Select and represent
the legal, valid and binding obligations of Select, enforceable against
Select in accordance with their terms, subject to the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent transfer or
conveyance and similar laws relating to or affecting creditors' rights and
remedies generally and court decisions with respect thereto, and such
counsel shall express no opinion with respect to the application of
equitable principles in any proceeding, whether at law or in equity, as to
the enforceability of any provision of the Agreement relating to remedies
after default, as to the availability of any specific or equitable relief
of any kind, or with respect to the provisions of this Agreement intended
to limit liability for particular matters to the Select Fund and its
Assets, including but not limited to Sections 32 and 33 of this Agreement;
(iv) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated by this Agreement will not,
violate the Declaration of Trust or By-Laws of Select or any material
agreement known to such counsel to which Select is a party or by which
Select may be bound; and (v) to such counsel's knowledge, no consent,
approval, authorization or order of any court, governmental authority or
agency is required for the consummation by Select of the transactions
contemplated by this Agreement, except such as have been obtained under the
1933 Act, the 1934 Act, the 1940 Act and Ohio securities laws (including,
in the case of each of the foregoing, the rules and regulations
thereunder).
(f) The Firstar Post-Effective Amendment shall have become effective
under the 1933 Act and the 1940 Act and no stop order suspending such
effectiveness shall have been instituted, or, to the knowledge of Firstar,
contemplated by the SEC, and the parties shall have received all permits,
licenses and other authorizations necessary under applicable state
securities laws to consummate the transactions contemplated by this
Agreement and all such permits, licenses and other authorizations shall be
in full force and effect at such time.
(g) At the Effective Time of the Reorganization, Select shall have
performed and complied in all material respects with each of its agreements
and covenants required by this Agreement to be performed or complied with
by Select prior to or at the Valuation Time and the Effective Time of the
Reorganization and Firstar shall have received a certificate from the
President or Vice President of Select, dated as of such date, certifying on
behalf of Select that the conditions set forth in this clause (g) have
been, and continue to be, satisfied.
(h) Select's agreements with each of its service contractors shall have
terminated at the Effective Time of the Reorganization and each party shall
have received reasonable assurance that no claim for damages (liquidated or
otherwise) will arise as a result of such termination.
(i) Firstar shall have received the tax opinion provided for in Section
15 hereof.
(j) Firstar shall have received any necessary exemptive relief from the
SEC with respect to Section 17(a) of the 1940 Act.
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<PAGE>
14. Select Conditions. The obligations of Select (and of the Select Fund)
hereunder shall be subject to the following conditions precedent:
(a) This Agreement and the transactions contemplated by this Agreement
shall have been approved by the Board of Directors of Firstar (including
the determinations required by Rule 17a-8(a) under the 1940 Act) and by the
shareholders of the Select Fund, in each case, in the manner required by
law.
(b) The Articles of Amendment shall have been approved by the
shareholders of Firstar and filed with the office of the Department of
Financial Institutions of the State of Wisconsin.
(c) All representations and warranties of Firstar made in this Agreement
shall be true and correct in all material respects on the date hereof, at
the Valuation Time and at the Effective Time of the Reorganization, in each
case, as if made at and as of such time. As of the Valuation Time and at
the Effective Time of the Reorganization, there shall have been no material
adverse change in the financial position of Firstar since the date of the
financial statements referred to in Section 9(h) other than those changes
(including, without limitation, changes due to net redemptions) incurred in
the ordinary course of business as an investment company since the date of
the financial statements referred to in Section 9(h). At the Effective Time
of the Reorganization, Select shall have received a certificate from the
President or Vice President of Firstar, dated as of such date, certifying
on behalf of Firstar that as of such date each of the conditions set forth
in this clause (c) have been met.
(d) Select shall have received an opinion of Drinker Biddle & Reath LLP,
counsel to Firstar, addressed to Select, in form and substance reasonably
satisfactory to Select and dated the Effective Time of the Reorganization,
to the effect that as of the date of such opinion, and subject to
qualifications and conditions reasonably acceptable to Select: (i) Firstar
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Wisconsin; (ii) the shares of the Firstar
Fund to be delivered to the Select Fund are duly authorized and upon
delivery will be registered under the 1933 Act and the 1940 Act, validly
issued, fully paid and non-assessable by the Firstar Fund, and to such
counsel's knowledge, no shareholder of the Firstar Fund has any statutory
preemptive right to subscription or purchase in respect thereof; (iii) this
Agreement has been duly and validly authorized, executed and delivered by
Firstar and represents the legal, valid and binding obligation of Firstar,
enforceable against Firstar in accordance with the terms hereof, subject to
the effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent transfer or conveyance and similar laws relating to
or affecting creditors' rights and remedies generally and court decisions
with respect thereto, and such counsel shall express no opinion with
respect to the application of equitable principles in any proceeding,
whether at law or in equity, as to the enforceability of any provision of
the Agreement relating to remedies after default, as to the availability of
any specific or equitable relief of any kind, or with respect to the
provisions of this Agreement intended to limit liability for particular
matters to the Firstar Fund and its Assets, including but not limited to
Sections 32 and 33 of this Agreement; (iv) the execution and delivery of
this Agreement did not, and the consummation of the transactions
contemplated by this Agreement will not, violate the Articles of
Incorporation or Bylaws of Firstar, or any material agreement known to such
counsel to which Firstar is a party or by which Firstar may be bound; (v)
the consummation of the transactions contemplated by this Agreement will
not violate the securities registration provisions of the 1933 Act or the
1940 Act (including, in the case of each of the foregoing, the rules and
regulations thereunder); and (vi) to such counsel's knowledge, no consent,
approval, authorization or order of any court, governmental authority or
agency is required for the consummation by Firstar of the transactions
contemplated by this Agreement, except such as have been obtained under the
1933 Act, the 1934 Act, the 1940 Act, and Wisconsin securities laws
(including, in the case of each of the foregoing, the rules and regulations
thereunder). The opinion may rely on the opinion of Foley & Lardner to the
extent set forth in the opinion.
(e) The Firstar Post-Effective Amendment shall have become effective
under the 1933 Act and the 1940 Act and no stop order suspending such
effectiveness shall have been instituted, or, to the knowledge of Firstar,
contemplated by the SEC, and the parties shall have received all permits,
licenses and other authorizations necessary under applicable state
securities laws to consummate the transactions
10
<PAGE>
contemplated by this Agreement, and all such permits, licenses and other
authorizations shall be in full force and effect at such time.
(f) At the Effective Time of the Reorganization, Firstar shall have
performed and complied in all material respects with each of its agreements
and covenants required by this Agreement to be performed or complied with
by Firstar prior to or at the Valuation Time and the Effective Time of the
Reorganization and Select shall have received a certificate from the
President or Vice President of Firstar, dated as of such date, certifying
on behalf of Firstar that the conditions set forth in this clause (f) have
been, and continue to be, satisfied.
(g) Select shall have received the tax opinion provided for in Section
15 hereof.
(h) Select shall have received evidence, in form and substance
satisfactory to Select, of (1) the liability coverage for the Trustees and
officers of Select and (2) Firstar's agreement to indemnify the Trustees of
Select, in each case, pursuant to the covenants set forth in Section 9(n)
hereof.
(i) Select shall have received any necessary exemptive relief from the
SEC with respect to Section 17(a) of the 1940 Act.
15. Tax Opinion. Firstar and Select shall receive an opinion of Drinker
Biddle & Reath LLP addressed to both Firstar and Select, in a form reasonably
satisfactory to them and dated as of the Effective Time of the Reorganization,
substantially to the effect that on the basis of facts, representations, and
assumptions set forth in such opinion, and subject to qualifications and
exceptions reasonably acceptable to the parties:
(a) The Reorganization will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Select Fund and the Firstar
Fund will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code with respect to the Reorganization;
(b) In accordance with Section 361(a), 361(c)(1) and 357(a) of the Code,
no gain or loss will be recognized by the Select Fund upon the transfer of
substantially all of its Assets and substantially all of its Liabilities to
the Firstar Fund in exchange for the Firstar Fund Shares;
(c) In accordance with Section 1032(a) of the Code, no gain or loss will
be recognized by the Firstar Fund upon the receipt of substantially all of
the Assets and assumption of substantially all of the Liabilities of the
Select Fund in exchange for the Firstar Fund Shares;
(d) In accordance with Section 362(b) of the Code, the basis of the
Select Fund's Assets received by the Firstar Fund pursuant to the
Reorganization will be the same as the basis of those Assets in the hands
of the Select Fund immediately prior to the Reorganization;
(e) In accordance with Section 1223(2) of the Code, the holding period
of the Select Fund's Assets in the hands of the Firstar Fund will include
the period for which such assets have been held by the Select Fund;
(f) In accordance with Section 361(a), 361(c)(1) and 357(a) of the Code,
no gain or loss will be recognized by the Select Fund on the distribution
to its shareholders of the Firstar Fund Shares to be received by the Select
Fund in the Reorganization;
(g) In accordance with Section 354(a)(1) of the Code, no gain or loss
will be recognized by the shareholders of the Select Fund upon their
receipt of the Firstar Fund Shares in exchange for such shareholders'
shares of the Select Fund;
(h) In accordance with Section 358(a)(1) of the Code, the basis of the
Firstar Fund Shares received by the shareholders of the Select Fund will be
the same as the basis of the Select Fund shares surrendered by such
shareholders pursuant to the Reorganization;
(i) In accordance with Section 1223(1) of the Code, the holding period
for the Firstar Fund Shares received by each Select Fund shareholder will
include the period during which such shareholder held the Select Fund
shares surrendered therefor, provided that the Select Fund shares are held
as a capital asset in the hands of such Select Fund shareholder on the date
of the exchange; and
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(j) The Firstar Fund will succeed to and take into account the tax
attributes described in Section 381(c) of the Code of the Select Fund as of
the Effective Time of the Reorganization, subject to the conditions and
limitations specified in the Code.
In rendering the opinion described in this paragraph, Drinker Biddle &
Reath LLP may require and, to the extent it deems necessary and
appropriate, may rely upon representations made in certificates of the
Firstar Fund and the Select Fund, their affiliates, and principal
shareholders.
16. Tax Documents. Select shall deliver to Firstar at the Effective Time of
the Reorganization, confirmations and/or other evidence satisfactory to
Firstar as to the adjusted tax basis of the Assets of the Select Fund
delivered to the Firstar Fund in accordance with the terms of this Agreement.
17. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto shall use its best efforts to execute and
deliver, or cause to be executed and delivered, such additional documents and
instruments and to do, or cause to be done, all things necessary, proper or
advisable under the provisions of this Agreement and under applicable law to
consummate and make effective the transactions contemplated by this Agreement,
including, without limitation, delivering and/or causing to be delivered to
the other party hereto each of the items required under this Agreement as a
condition to such other party's obligations hereunder. In addition, Select
shall deliver or cause to be delivered to Firstar, each account, book, record
and other document of Select required to be maintained by Select pursuant to
Section 31(a) of the 1940 Act and Rules 31a-1 to 31a-3 thereunder (regardless
of whose possession they are in).
18. Termination of Representations and Warranties. The representations and
warranties of the parties set forth in this Agreement shall terminate upon the
consummation of the transactions contemplated herein; provided, however, that
nothing contained in this Section 18 shall be construed (a) to terminate the
obligations of the Firstar Fund to discharge the Liabilities of the Select
Fund assumed pursuant to Section 2(b) hereof, or (b) to terminate the
obligations of Firstar to provide liability coverage for the Trustees and
officers of Select and to indemnify the Trustees of Select, in each case,
pursuant to the covenants set forth in Section 9(n) hereof.
19. Termination of Agreement. This Agreement may be terminated by a party
at any time at or prior to the Effective Time of the Reorganization by a vote
of a majority of such party's Board of Directors or Trustees, as applicable,
as provided below:
(a) By Firstar if the conditions set forth in Section 13 are not
satisfied as specified in said Section;
(b) By Select if the conditions set forth in Section 14 are not
satisfied as specified in said Section; or
(c) By mutual consent of both parties.
If a party terminates this Agreement because one or more of its conditions
have not been fulfilled, or if this Agreement is terminated by mutual consent,
this Agreement will become null and void insofar as it is so terminated
without any liability of any party to the other parties except as otherwise
provided herein.
20. Amendment and Waiver. At any time prior to or (to the fullest extent
permitted by applicable law) after approval of this Agreement by the
shareholders of Select pursuant to Section 10 hereof, (a) the parties hereto
may, by written agreement authorized by their respective Boards of Directors
or Trustees, as the case may be, and with or without the approval of their
shareholders, amend, modify or terminate any of the provisions of this
Agreement, and (b) any party may waive any breach by any other party or any
failure by any other party to satisfy any of the conditions to the obligations
of the waiving party (such waiver to be in writing and authorized by an
authorized officer of the waiving party) with or without the approval of such
party's shareholders.
21. Governing Law. This Agreement and the transactions contemplated hereby
shall be governed, construed and enforced in accordance with the internal laws
of the State of Wisconsin, without giving effect to the conflicts of law
principles of such state.
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22. Successors and Assigns. This Agreement shall be binding upon the
respective successors and permitted assigns of the parties hereto. This
Agreement and the rights, obligations and liabilities hereunder may not be
assigned by any party without the prior written consent of the other party.
23. Beneficiaries. Nothing contained in this Agreement shall be deemed to
create rights in persons not parties hereto (including, without limitation,
any shareholder of Firstar or Select), other than (a) the Trustees and
officers of Select with respect to the covenants set forth in Section 9(n)
hereof, and (b) the successors and permitted assigns of the parties.
24. Notices. All notices required or permitted herein shall be in writing
and shall be deemed to be properly given when delivered personally or by
telecopier to the party entitled to receive the notice or when sent by
certified or registered mail, postage prepaid, or delivered to a nationally
recognized overnight courier service, in each case, properly addressed to the
party entitled to receive such notice at the address or telecopier number
stated below or to such other address or telecopier number as may hereafter be
furnished in writing by notice similarly given by one party to the other party
hereto:
If to Firstar:
Firstar Funds, Inc.
615 East Michigan Street
P.O. Box 3011
Milwaukee, Wisconsin 53201-3011
With copies to:
W. Bruce McConnel, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, Pennsylvania 19103-6996
Telecopier Number: (215) 988-2757
If to Select:
Firstar Select Funds
431 North Pennsylvania Street
Indianapolis, Indiana 46204
With copies to:
Donald S. Mendelsohn, Esq.
Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower
441 Vine Street
Cincinnati, Ohio 45202
25. Expenses. With regard to the expenses incurred by Select and Firstar in
connection with this Agreement and the transactions contemplated hereby,
FIRMCO shall bear such expenses or cause one of its affiliates to bear such
expenses.
26. Entire Agreement. This Agreement embodies the entire agreement and
understanding of the parties hereto and supersedes any and all prior
agreements, arrangements and understandings relating to matters provided for
herein.
27. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
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28. No Brokers or Finders. Select, on behalf of both itself and the Select
Fund, and Firstar, on behalf of both itself and the Firstar Fund, each hereby
represents and warrants to the other party hereto that that there are no
brokers or finders entitled to receive any payments in connection with the
transactions provided for herein.
29. Validity. Whenever possible, each provision and term of this Agreement
shall be interpreted in a manner to be effective and valid, but if any
provision or term of this Agreement is held to be prohibited by law or
invalid, then such provision or term shall be ineffective only in the
jurisdiction or jurisdictions so holding and only to the extent of such
prohibition or invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining provisions
or terms of this Agreement.
30. Effect of Facsimile Signature. A facsimile signature of an authorized
officer of a party hereto on this Agreement and/or any Transfer Document shall
have the same effect as if executed in the original by such officer.
31. Headings. The headings contained herein are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.
32. Firstar Liability. Both parties specifically acknowledge and agree that
any liability of Firstar under this Agreement with respect to the Firstar
Fund, or in connection with the transactions contemplated herein with respect
to the Firstar Fund, shall be discharged only out of the assets of the Firstar
Fund and that no other portfolio of Firstar shall be liable with respect
thereto.
33. Select Liability. The names "Firstar Select Funds" and "Trustees of
Firstar Select Funds" refer respectively to the trust created and the
trustees, as trustees but not individually or personally, acting from time to
time under a Declaration of Trust dated February 28, 1997, as amended and
restated on May 20, 1997, which is hereby referred to and a copy of which is
on file at the office of the Secretary of State of the State of Ohio and at
the principal office of Select. The obligations of Select entered into in the
name or on behalf thereof by any of the trustees, representatives or agents
are made not individually, but in such capacities, and are not binding upon
any of the trustees, shareholders or representatives of Select personally, but
bind only the trust property, and all persons dealing with any series of
shares of Select must look solely to the trust property belonging to such
series for the enforcement of any claims against Select.
Both parties specifically acknowledge and agree that any liability of
Select under this Agreement with respect to the Select Fund, or in connection
with the transactions contemplated herein with respect to the Select Fund,
shall be discharged only out of the assets of the Select Fund.
[Signatures Omitted]
14
<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of March 27, 1992, between PORTICO FUNDS, INC., a
Wisconsin corporation (herein called "Portico Funds"), and FIRST WISCONSIN
ASSET MANAGEMENT ("Investment Adviser"), a subsidiary of Firstar Corporation.
WHEREAS, Portico Funds is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, Portico Funds desires to retain the Investment Adviser to furnish
investment advisory and other services to Portico Funds for its Balanced Fund
portfolio (the "Fund"), and the Investment Adviser is willing to so furnish
such services;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. Appointment.
(a) Portico Funds hereby appoints the Investment Adviser to act as
investment adviser to the Fund for the period and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees
to furnish the services herein set forth for the compensation herein
provided.
(b) In the event that Portico Funds establishes one or more portfolios
other than the Fund with respect to which it desires to retain the
Investment Adviser to act as investment adviser hereunder, it shall notify
the Investment Adviser in writing. If the Investment Adviser is willing to
render such services under this Agreement it shall notify Portico Funds in
writing whereupon such additional portfolio shall become subject to the
provisions of this Agreement to the same extent as the Fund named above in
the recitals except to the extent that said provisions (including those
relating to the compensation payable by the Fund to the Investment Adviser)
are modified with respect to such portfolio in writing by Portico Funds and
the Investment Adviser at the time.
2. Delivery of Documents. Portico Funds has furnished the Investment
Adviser with copies properly certified or authenticated of each of the
following:
(a) Portico Funds' Articles of Incorporation, as filed with the State
Secretary of the State of Wisconsin on February 15, 1988, and all
amendments thereto (such Articles of Incorporation, as presently in effect
and as the same shall from time to time be amended are herein called the
"Articles of Incorporation");
(b) Portico Funds' By-laws and amendments thereto;
(c) Resolutions of Portico Funds' Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) Portico Funds' Registration Statement, as amended, on Form N-1A
under the Securities Act of 1933, as amended ("1933 Act") (File No. 33-
18255), and under the 1940 Act; and
(e) The most recent prospectus of Portico Funds relating to the Fund
(such prospectus together with the related statement of additional
information, as presently in effect and all amendments and supplements
thereto, herein called the "Prospectus").
Portico Funds will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing, if any.
3. Services. Subject to the supervision of Portico Funds' Board of
Directors, the Investment Adviser will be responsible for the management of,
and will provide a continuous investment program for, the Fund including
investment research and management with respect to all securities,
investments, cash and cash equivalents in the
<PAGE>
Fund. The Investment Adviser will determine from time to time what securities
and other investments will be purchased, retained or sold by the Fund. The
Investment Adviser will provide the services rendered by it under this
Agreement in accordance with the Fund's investment objective, policies and
restrictions as stated in its Prospectus and resolutions of Portico Funds'
Board of Directors. Without limiting the generality of the foregoing, the
Investment Adviser is hereby specifically authorized to invest and reinvest
the assets of the Fund, in its discretion as investment adviser, agent and
fiduciary for the Fund, in (i) variable amount demand notes of corporate
borrowers held by the Investment Adviser for the investment of monies held by
the Investment Adviser in its capacity as fiduciary, agent and custodian and
(ii) securities of other investment companies whether or not the same are
advised or managed by the Investment Adviser or another affiliated person of
Portico Funds. Unless the Board of Directors of Portico Funds directs
otherwise in a particular instance or generally, the Investment Adviser is
hereby further authorized, on behalf of Portico Funds, to vote, give and
withhold consents with respect to, and take all other similar actions relating
to the securities and other investments owned by the Fund. In addition, the
Investment Adviser agrees that it will:
(a) Establish and monitor investment criteria and policies for the Fund;
(b) Update the Fund's cash availability throughout the day as required;
(c) Maintain historical tax lots for each portfolio security held by the
Fund;
(d) Transmit trades to Portico Funds' custodian for proper settlement;
(e) Maintain all books and records with respect to the Fund's securities
transactions;
(f) Supply Portico Funds and its Board of Directors with reports,
statistical data and economic information as requested; and
(g) Prepare a quarterly broker security transaction summary and monthly
security transaction listing for the Fund.
4. Other Covenants. The Investment Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law;
(b) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(c) will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In
executing portfolio transactions and selecting brokers or dealers, the
Investment Adviser will use its best efforts to seek on behalf of the Fund
the best overall terms available. In assessing the best overall terms
available for any transaction, the Investment Adviser shall consider all
factors that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Investment Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided
to the Fund and/or other accounts over which the Investment Adviser or an
affiliate of the Investment Adviser exercises investment discretion. The
Investment Adviser is authorized, subject to the prior approval of Portico
Funds' Board of Directors, to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if, but only if, the Investment Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer--viewed in terms of
that particular transaction or in terms of the overall responsibilities of
the Investment Adviser to the Fund. In addition, the Investment Adviser is
authorized to take into account the sale of shares of Portico Funds in
allocating purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with the
Investment Adviser or Portico Funds'
2
<PAGE>
principal underwriter), provided that the Investment Adviser believes that
the quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will
portfolio securities be purchased from or sold to the Investment Adviser,
Portico Funds' principal underwriter, or any affiliated person of either
Portico Funds, the Investment Adviser, or the principal underwriter, acting
as principal in the transaction, except to the extent permitted by the
Securities and Exchange Commission; and
(d) will maintain a policy and practice of conducting its investment
advisory services hereunder independently of the commercial banking
operations of it and its affiliates. When the Investment Adviser makes
investment recommendations for the Fund, its investment advisory personnel
will not inquire or take into consideration whether the issuer of
securities proposed for purchase or sale for the Fund's account are
customers of the commercial department maintained by it or one of its
affiliates. In dealing with commercial customers, the commercial
departments of the Investment Adviser and its affiliates will not inquire
or take into consideration whether securities of those customers are held
by the Fund.
5. Services Not Exclusive. The services furnished by the Investment Adviser
hereunder are deemed not to be exclusive, and the Investment Adviser shall be
free to furnish similar services to others so long as its services under this
Agreement are not impaired thereby. To the extent that the purchase or sale of
securities or other investments of the same issuer may be deemed by the
Investment Adviser to be suitable for two or more accounts managed by the
Investment Adviser, the available securities or investments may be allocated
in a manner believed by the Investment Adviser to be equitable to each
account. It is recognized that in some cases this procedure may adversely
affect the price paid or received by the Fund or the size of the position
obtainable for or disposed of by the Fund.
6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Fund are the property of Portico Funds and further
agrees to surrender promptly to Portico Funds any of such records upon Portico
Funds' request. The Investment Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
7. Expenses. During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased or sold for the Fund. In addition, if the aggregate expenses borne
by the Fund in any fiscal year exceed the applicable expense limitations
imposed by the securities regulations of any state in which its shares are
registered or qualified for sale to the public, the Investment Adviser shall
reimburse the Fund for any such excess to the extent that said securities
regulations so require. Such expense reimbursement, if any, will be estimated,
reconciled and paid on a monthly basis.
8. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Portico Funds will pay the Investment Adviser and
the Investment Adviser will accept as full compensation therefor: (a) 4/10ths
of the gross income earned by the Fund on each loan of its securities
(excluding capital gains and losses, if any), plus (b) a fee, computed daily
and payable monthly, at the annual rate of .75% of the average daily net
assets of the Fund.
9. Limitation of Liability. The Investment Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by Portico
Funds in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
10. Duration and Termination. This Agreement shall become effective as of
the date hereof with respect to the Fund listed in Section 1(a) hereof, and
with respect to any additional portfolio, on the date of receipt by
3
<PAGE>
Portico Funds of notice from the Investment Adviser in accordance with Section
1(b) hereof that the Investment Adviser is willing to serve as investment
adviser with respect to such portfolio, provided that this Agreement (as
supplemented by the terms specified in any notice and agreement pursuant to
Section 1(b) hereof) shall have been approved by the shareholders of the Fund
(or any portfolio added pursuant to Section 1(b) hereof) in accordance with
the requirements of the 1940 Act and, unless sooner terminated as provided
herein, shall continue in effect with respect to the Fund (or any portfolio
added pursuant to Section 1(b) hereof) until February 28, 1993. Thereafter, if
not terminated, this Agreement shall automatically continue in effect as to a
particular portfolio for successive annual periods, provided such continuance
is specifically approved at least annually (a) by the vote of a majority of
those members of Portico Funds' Board of Directors who are not interested
persons of any party to this Agreement, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by Portico Funds' Board of
Directors or by vote of a majority of the outstanding voting securities of
such portfolio. Notwithstanding the foregoing, this Agreement may be
terminated as to a particular portfolio at any time, without the payment of
any penalty, by Portico Funds (by vote of Portico Funds' Board of Directors or
by vote of a majority of the outstanding voting securities of such portfolio),
or by the Investment Adviser on sixty days' written notice. This Agreement
will immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning as such
terms have in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective as to the Fund (or any other portfolio subject to this Agreement)
until approved by vote of a majority of the outstanding voting securities of
the Fund (or such portfolio).
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Wisconsin law.
[Signatures Omitted]
4
<PAGE>
FORM OF ADDENDUM NO. 11 TO THE INVESTMENT ADVISORY AGREEMENT
This Addendum, dated as of the day of , 2000, is entered into
between FIRSTAR FUNDS, INC. (the "Company"), a Wisconsin corporation, and
Firstar Investment Research and Management Company, LLC (the "Investment
Adviser").
WHEREAS, the Company and the Investment Adviser have entered into an
Investment Advisory Agreement dated as of March 27, 1992 (the "Advisory
Agreement"), pursuant to which the Company appointed the Investment Adviser to
act as investment adviser to the Company for its Balanced Fund;
WHEREAS, Section 1(b) of the Advisory Agreement provides that in the event
the Company establishes one or more additional investment portfolios with
respect to which it desires to retain the Investment Adviser to act as the
investment adviser under the Advisory Agreement, the Company shall so notify
the Investment Adviser in writing, and if the Investment Adviser is willing to
render such services it shall notify the Company in writing, and the
compensation to be paid to the Investment Adviser shall be that which is
agreed to in writing by the Company and the Investment Adviser; and
WHEREAS, pursuant to Section 1(b) of the Advisory Agreement, the Company
has notified the Investment Adviser that it has established the Ohio Tax-
Exempt Money Market Fund, Aggregate Bond Fund, National Municipal Bond Fund,
Missouri Tax-Exempt Bond Fund, U.S. Government Income Fund, Strategic Income
Fund, Equity Income Fund, Relative Value Fund, Large Cap Growth Fund, Science
& Technology Fund, REIT Fund, Small Cap Index Fund and Global Equity Fund and
that it desires to retain the Investment Adviser to act as the investment
adviser therefor, and the Investment Adviser has notified the Company that it
is willing to serve as investment adviser for the Ohio Tax-Exempt Money Market
Fund, Aggregate Bond Fund, National Municipal Bond Fund, Missouri Tax-Exempt
Bond Fund, U.S. Government Income Fund, Strategic Income Fund, Equity Income
Fund, Relative Value Fund, Large Cap Growth Fund, Science & Technology Fund,
REIT Fund, Small Cap Index Fund and Global Equity Fund (the "Funds");
NOW THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Appointment. The Company hereby appoints the Investment Adviser to act
as investment adviser to the Company for the Funds for the period and the
terms set forth herein and in the Advisory Agreement. The Investment Adviser
hereby accepts such appointment and agrees to render the services set forth
herein and in the Advisory Agreement, for the compensation herein provided.
2. Compensation. For the services provided and the expenses assumed with
respect to the Funds pursuant to the Advisory Agreement and this Addendum, the
Company will pay the Investment Adviser and the Investment Adviser will accept
as full compensation therefor (a) 4/10 of the gross income earned by each Fund
on the loan of its securities (excluding capital gains and losses if any),
plus (b) a fee, computed daily and paid monthly, at the annual rate of 0.55%
of the average daily net assets of the Ohio Tax-Exempt Money Market Fund,
0.50% of the average daily net assets of the Aggregate Bond Fund, 0.55% of the
average daily net assets of the National Municipal Bond Fund, 0.45% of the
average daily net assets of the Missouri Tax-Exempt Bond Fund, 0.60% of the
average daily net assets of the U.S. Government Income Fund, 0.95% of the
average daily net assets of the Strategic Income Fund, 0.75% of the average
daily net assets of the Equity Income Fund, 0.75% of the average daily net
assets of the Relative Value Fund, 0.95% of the average daily net assets of
the Large Cap Growth Fund, 1.05% of the average daily net assets of the
Science & Technology Fund, 0.75% of the average daily net assets of the REIT
Fund, 0.40% of the average daily net assets of the Small Cap Index Fund and
0.75% of the average daily net assets of the Global Equity Fund.
3. Miscellaneous. Except to the extent supplemented hereby, the Advisory
Agreement shall remain unchanged and in full force and effect and is hereby
ratified and confirmed in all respects as supplemented hereby.
[Signatures Omitted]
<PAGE>
<TABLE>
<CAPTION>
FIRSTAR SELECT FUNDS VOTE THIS PROXY CARD TODAY
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204 FIRSTAR SELECT FUNDS
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204
FIRSTAR SELECT REIT-PLUS FUND
SPECIAL MEETING OF SHAREHOLDERS
<S> <C>
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF
FIRSTAR SELECT FUNDS (THE "TRUST") FOR USE AT A SPECIAL
MEETING OF SHAREHOLDERS OF THE ABOVE-REFERENCED FUND OF
THE TRUST TO BE HELD ON NOVEMBER 8, 2000 AT 11:00 A.M.
(EASTERN TIME) AT THE OFFICES OF THE TRUST'S SPECIAL
COUNSEL, DRINKER BIDDLE & REATH LLP, ONE LOGAN SQUARE,
18th AND CHERRY STREETS, PHILADELPHIA, PENNSYLVANIA.
The undersigned hereby appoints W. Bruce McConnel III,
Joan Ohlbaum Swirsky, Kathryn R. Williams, Laura Rauman,
Jeffrey Squires and Doug Hess, and each of them, with
full power of substitution, as proxies of the undersigned
to vote at the above-referenced Special Meeting of
Shareholders, and at all adjournments thereof, all shares
of beneficial interest of the Fund held of record by the
undersigned on the record date for the Special Meeting,
upon the following matters, and at their discretion
TO VOTE BY TELEPHONE upon any other matter which may properly come before the
Special Meeting.
1) Read the Proxy Statement and have the Proxy card below at hand. THIS PROXY WILL BE VOTED AS SPECIFIED BELOW WITH RESPECT
2) Call 1-800-690-6903 TO THE ACTION TO BE TAKEN ON THE FOLLOWING PROPOSALS.
3) Enter the 12-digit control number set forth on the Proxy card and IN THE ABSENCE OF ANY SPECIFICATION, THIS PROXY WILL BE
follow the simple instructions. VOTED FOR EACH OF THE PROPOSALS.
TO VOTE BY INTERNET
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy card and follow
the simple instructions.
</TABLE>
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
<TABLE>
<CAPTION>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS FIRST2 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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FIRSTAR SELECT REIT-PLUS FUND
<S> <C> <C> <C>
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF THE
TRUST AND THE PROXY STATEMENT DATED SEPTEMBER 29, 2000.
VOTE ON PROPOSALS
1 To approve: (a) a proposed Agreement and Plan of Reorganization dated as of August 15, 2000 by
and between Firstar Select Funds (the "Trust") and Firstar Funds, Inc. ("Firstar Funds"), which
provides for and contemplates (i) the transfer of substantially all of the assets and
liabilities of the Firstar Select REIT-Plus Fund (the "Select REIT Fund") of Firstar REIT Fund,
a newly organized portfolio of Firstar Funds (the "Firstar REIT Fund"), in exchange for
Institutional Shares of the Firstar REIT Fund of equal value, and (ii) the distribution of the
Institutional Shares of the Firstar REIT Fund to shareholders of the Select REIT Fund; (b) FOR AGAINST ABSTAIN
liquidation of the Select REIT Fund; and (c) the deregistration of the Trust under the
Investment Company Act of 1940, as amended, and termination of the Trust under state law. [_] [_] [_]
2. To approve an investment advisory agreement between Firstar Funds and Firstar Investment
Research and Management Company, LLC on behalf of the Firstar REIT Fund. [_] [_] [_]
Please sign below exactly as name(s) appear(s) hereon. Corporate or partnership proxies should be signed in full corporate or
partnership name by an authorized officer. Each joint owner should sign personally. When signing as a fiduciary, please give full
title as such.
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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</TABLE>
